SoftBank Group Corp. has set the price for Asia’s second-largest offshore fixed income transaction this year, raising approximately $ 7.35 billion in bicurrency-denominated debt offerings.
A major Japanese tech company sold $ 3.85 billion in dollar-denominated debt and € 2.95 billion ($ 3.5 billion) in bonds on Wednesday, second only to Nippon Telegraph and Telephone in February. It was an overseas debt transaction by Softbank since 2018.
Driven by investment sector profits, SoftBank posted record quarterly profits from Japanese companies earlier this year. Founded and led by Masayoshi Son, the company entered the market at an ideal time, with US junk-rated dollar bond yields at record lows and tech stocks near record highs. Still, the outlook for rising interest rates could bring headwinds to one of Japan’s most debt-rich companies.
Softbank, which has a speculative grade score of BB + at S & P Global Ratings, said it plans to use the proceeds from Wednesday’s fixed income transactions to repay existing debt and for general corporate purposes. According to a spokesman for the company, issuers have received more than $ 16 billion worth of demand from more than 400 investors.
CreditSights analysts Mary Pollock and Oliver Burke said Softbank’s top priority for cash would probably continue to be a “speculative and risky investment” by buying shares in a private sector through one of its investment funds. I wrote in this week’s memo. They wrote that if their son’s strategy or changes in risk sentiment were surprised by the downsides of creditors, they would prefer to expose the company to short-term debt because it is unlikely to revise the price of risk.
According to data compiled by Bloomberg, SoftBank sold about $ 12.7 billion in bonds this year, making it the world’s largest junk-rated corporate bond issuer in the first half of the year.
The price in June was 450 billion yen ($ 3.6 billion), which was the largest notebook sales of the year in the domestic market. Japan Credit Rating Agency evaluates issuers and recent yen bond offerings as investment grade.
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