An accounting probe of Toshiba Corp.’s infrastructure and energy projects caused its default risk to jump the most in Japan, just as the creditworthiness of Sharp Corp. and Sony Corp. had been improving.

The cost to insure Toshiba debt against nonpayment surged 80 basis points in two days to 130 basis points, according to credit-default swap data from CMA. The biggest increase in Japan in the past month made it the nation’s most-expensive-listed company to protect, after Sharp and Sojitz Corp.

Toshiba has been able to avoid the more than ¥1.5 trillion ($12.5 billion) in combined losses racked up by Sharp and Sony during the past four years as profits from its chip, energy, and health care businesses offset deficits in consumer electronics. The company’s stock dropped 17 percent in two days, its bond yield premium widened and at least seven analysts suspended coverage amid the investigation into improper accounting on projects. Investors should brace themselves for a possible one-level rating downgrade, according to BNP Paribas SA.

“How far this issue will run will depend on the level of any maliciousness involved,” said Mana Nakazora, the chief credit analyst in Tokyo at BNP Paribas. “Did upper level management act perniciously? If it doesn’t go that far then from a monetary perspective the company can probably cope with it.”

The 140-year-old company said May 8 it may have to revise earnings from fiscal year 2013 and earlier. It canceled its share dividend and appointed a third-party committee to investigate.

“The management has inadvertently sent a signal that the problems are potentially bigger, without saying how big they might be,” said Damian Thong, a Tokyo-based analyst at Macquarie Group Ltd. “The uncertainty and open-endedness is what the markets are reacting adversely to.”

Toshiba’s 0.567 percent bond dropped to ¥97.96 per ¥100 from 100.93 on May 8, according to data compiled by Bloomberg. The yield premium on the note jumped 68 basis points on May 11 to 95 basis points more than sovereign debt.

Toshiba, which bought U.S. nuclear-reactor builder Westinghouse Electric Co. in 2006, is rated BBB by Standard & Poor’s and Baa2 by Moody’s Investors Service, the second-lowest investment score at both companies. That is one grade above Sony and eight levels higher than Sharp, based on S&P assessments.

Tokyo-based Toshiba’s probability of debt nonpayment within one year has climbed to 0.23 percent from about 0.11 percent last week, according to the Bloomberg default-risk model, which considers factors such as share prices and debt. The gauge suggests the second-lowest investment grade now for the company, compared with the third-lowest on May 8.

Toshiba is “deeply sorry” about the concern its accounting probe has caused among market participants and is doing everything it can “to regain their trust,” said Masumi Fukuoka, a Tokyo-based spokeswoman at the company.

Sony’s debt risk has dropped six basis points since the end of March to 64 basis points, while Sharp’s contracts have fallen 100 to 501, after rising as high as 851 on March 3, according to CMA data.

Toshiba’s business that makes home appliances, personal computers and visual products generated an operating loss of ¥51 billion in the year that ended in March 2014, according to the company’s most recent earnings report.

That compares with a profit of ¥32.3 billion from its energy and infrastructure operations, and ¥238.4 billion from its business that makes chips and data storage memory devices. Toshiba was forecasting a fifth-consecutive year of profit before last week’s sudden earnings revision announcement.

The accounting investigation at Toshiba is rekindling memories of a scandal at camera-maker Olympus Corp., which used fraudulent takeover deals to hide losses for 13 years starting in the 1990s. It went on to restate five years of earnings results in 2011.

Toshiba’s diversification into sectors including health care, transportation, and infrastructure has proved to be a support for the company’s earnings and balance sheet, according to BNP’s Nakazora.

“If there has been window-dressing of earnings then it is a big problem, but I am guessing it is only some discrepancy in the timing of reports,” said Nakazora. “Because investors don’t know what is going to come next, buying CDS protection is the logical reaction.”

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