West Japan Railway Co., starting the nation's newest bullet train service this week, is slashing interest costs by using the world's lowest bond yields to refinance government loans.
The railway, also known as JR West, sold ¥10 billion of bonds maturing in 2021 at a yield of 1.408 percent last month to help repay loans averaging 5.38 percent, according to company spokesman Makio Hayashi. The Osaka-based carrier, which offered 9 basis points, or 0.09 point, more than government interest rates on the new securities, plans to repay ¥243 billion in train loans by 2017.
Financing at rates just above what the government pays shows why Japanese firms are borrowing in the bond market at the fastest pace in two years. Companies in the Nikkei 225 stock average pay an average yield of 1.45 percent on publicly traded debt securities, compared with 5.64 percent for those in the Standard & Poor's 500, Bloomberg data show.