World’s Fastest Train Plan Boosted as Risk Drops: Japan Credit

By Chris Cooper September 28, 2014

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The prototype maglev train on exhibit at the new wing of the Yamanashi Prefectural Maglev Exhibition Center in Tsuru, Yamanashi, Japan, on April 14, 2014. The technology that is set to link Tokyo and Nagoya by 2027 is being developed by Central Japan Railway Co. Source: The Asahi Shimbun via Getty Images

Central Japan Railway Co. (9022)’s bond risk fell to a six-year low as record earnings (9022:US) help pay for the $47 billion needed to build the world’s fastest train line.

The cost to insure its debt against default fell to 18 basis points this month, a level unseen since January 2008. The yield on 15 billion yen ($137 million) of 18-year bonds sold by the operator has dropped about eight basis points since they were sold on Sept. 12. Work starts this fiscal year on the magnetic levitation train link between Tokyo and Nagoya, which will run at 500 kilometers (311 miles) per hour.
Central Japan’s debt protection cost is less than a quarter of the peak in March 2009, when the global financial crisis exacerbated concerns over the company’s plan to spend 5.1 trillion yen on the maglev line. Sentiment toward the company’s debt, rated (9022:US) fourth-highest Aa3 by Moody’s Investors Service, improved after a report this month showed bullet train passengers rose to a record since April 1.