Toyota Motor Corp.'s two-year reign as a better credit than the Japanese government has ended as violent protests over the Senkaku Islands dispute with China hurt its sales in the world's biggest car market.

The credit-default swaps for Toyota climbed 8.4 basis points to 85.5 basis points Wednesday, exceeding the 84 basis points for the sovereign for the first time since August 2010, according to data provider CMA.

Those for Honda Motor Co. rose 7.5 to 85.9, while Volkswagen AG increased 1.1 to 105.5, the data show.

Toyota's September deliveries in China dropped 49 percent from a year earlier, the biggest drop since at least 2008, after demonstrators protesting Japan's purchase of three of the disputed islets torched Japanese auto showrooms and smashed vehicles last month.

Continuing tensions are deterring buyers concerned that their automobiles will be targeted, according to Kazuo Ohara, executive vice president at Toyota's luxury brand Lexus.

"Sales halving in September suggests the issue will probably linger longer than expected," Shintaro Niimura, a credit analyst at Nomura Securities Co., said Thursday. "The first impression was that the impact would be limited to just a couple of days. Now, the credit markets are recognizing the China risks are really there."

The increase in automaker bond risk contrasts with the Markit iTraxx Japan index of credit-default swaps for 50 companies. The gauge declined one basis point to 226.6 on Wednesday, according to CMA, which compiles prices quoted by dealers in the privately negotiated market. An increase signals worsening perceptions of creditworthiness.

Lexus is refraining from marketing campaigns in China for the time being, Lexus' Ohara said Thursday.