JR West to issue unprecedented 40-year bonds to capitalize on negative rate


West Japan Railway Co. said Friday it will issue unprecedented 40-year bonds, taking advantage of the cheaper funding brought about by the Bank of Japan’s negative interest rate.

The ¥10 billion, 1.575-percent bonds will have the longest term of any yet issued by a private company in Japan, according to the operator, commonly known as JR West. It will use the funds raised to redeem other bonds and invest in railway safety.

Analysts expect other companies to follow suit, on the back of the drop in the bond market.

The Bank of Japan imposed a minus-0.1 percent interest rate on Tuesday, bringing down returns on major financial instruments to near zero. This makes corporate bonds with higher yields more attractive to investors.

Meanwhile, JR West also announced the issue of 20-year bonds worth ¥10 billion with a coupon of 0.816 percent.