Sony Corp. (6758), the maker of Bravia televisions, is seeking to raise 150 billion yen ($1.5 billion) in its first sale of bonds targeting individual investors.
The five-year notes will be priced to yield 0.8 percent to 1.4 percent, the Tokyo-based company said in a filing with Japan’s Finance Ministry today. Terms will be set on June 7 before Sony offers the debt to investors from June 10 to June 18, it said.
The TV maker joins SoftBank Corp. (9984) in planning to market bonds to Japan’s retail investors as it seeks to capitalize on its brand name to diversify funding. Shares of Sony, which will release a new PlayStation 4 console this year, have more than doubled since December as it benefits from a slumping yen and billionaire Daniel Loeb’s proposal for an initial public offering of its entertainment assets.
“It’s good for Sony to have increased diversity in its investor pool,” said Damian Thong, an analyst at Macquarie Securities Ltd. in Tokyo, who has an outperform rating on the company’s stock. The funds may help with development of the PS4 or be invested in Sony’s image sensor business, he said.
Sony is strengthening its financial position by accessing new funding sources, spokeswoman Mami Imada said by phone today. Proceeds from the offering will be used to repay maturing debt and invest in equipment, she said.
Chief Executive Officer Kazuo Hirai said last week Sony will continue focusing on imaging products, mobile devices and games to revive the company’s unprofitable electronics operation.
Earlier this week, Sony cut its profit margin target for the game business to 2 percent for the year ending March 2015 from 8 percent projected a year ago, citing expenses for promoting the new PS4 console for introduction by year’s end.
Sony this month said net income may rise 16 percent to 50 billion yen in the year started April 1 as the Tokyo-based company forecasts a 10 percent increase in sales.
The company last sold bonds in November when it raised 150 billion yen in a sale to institutions of zero-coupon convertible notes due 2017, according to data compiled by Bloomberg.
Japan’s top TV maker cut jobs and sold assets to post its first annual profit in five years even as its main electronics business continued to lose money in the year ended March.
Moody’s Investors Service rates Sony debt at Baa3, the risk assessor’s lowest investment grade, while Standard & Poor’s has a BBB rating, which is two levels above junk, according to data compiled by Bloomberg. Both have a negative outlook on Sony.
Loeb’s proposal by itself probably won’t solve the group’s credit weaknesses, said Fitch Ratings, which rates Sony at BB-, or the third-highest non-investment grade, in a May 16 statement.
“Monetising a small minority of the entertainment business will neither tighten the group’s strategic focus nor provide sufficient impetus to transform the electronics business,” Fitch said.
The company plans to spend 180 billion yen in capital investment, down 4.6 percent from a year earlier, it said May 9. Sony doesn’t disclose details of its investment plan, Imada said today.
Sony has 10.7 billion yen of bonds and 78 billion yen in loans coming due this year, according to data compiled by Bloomberg.
SoftBank, the Japanese carrier bidding to take over Sprint Nextel Corp. (S) in a $20.1 billion deal, plans to sell 400 billion yen of bonds next month targeting individual investors to fund the purchase.