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.