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JR East Raises 30 Billion Yen in Bonds, Lowers Cost

July 9 (Bloomberg) -- East Japan Railway Co., the nation’s largest train operator by sales, sold 30 billion yen ($338 million) of bonds to repay maturing debt, cutting funding costs from four months ago.

The operator priced 15 billion yen of five-year 0.446 percent bonds to yield 8 basis points more than similar-maturity Japanese government bonds, and another 15 billion yen of 10-year, 1.222 percent notes at a 7 basis-point spread, according to data compiled by Bloomberg. The company made a filing with Japan’s Finance Ministry today to sell the bonds.

Investors are buying top-rated corporate debt in Japan amid concerns over a possible double-dip recession. The extra yield investors demand to own corporate bonds rated AA instead of government debt averaged 25 basis points yesterday, down from 27 on June 29, the Bank of America Merrill Lynch AA Rated Japan Corporate Index shows.

JR East, rated Aa1 by Moody’s Investors Service, the second-highest investment grade, lowered its funding cost from March when the Tokyo-based operator set the spread at 8 basis points for its 10-year 1.394 percent bonds, Bloomberg data show.

Mizuho Securities Co. and Nomura Securities Co. are helping the operator sell the debt, the data show.

To contact the reporters on this story: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net Takashi Ueno in Tokyo at tueno@bloomberg.net

To contact the editor responsible for this story: Will McSheehy at wmcsheehy@bloomberg.net

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