Softbank to Raise $4 Billion in Bonds to Pay for Sprint Purchase
Softbank Corp. (9984), the Japanese wireless carrier that agreed to buy a $20 billion stake in Sprint Nextel Corp. (S), wants to raise 370 billion yen ($4 billion) in bonds to help finance the acquisition.
Japan’s third-largest carrier priced 300 billion yen of 1.47 percent four-year notes that will go on sale to retail investors on Feb. 25, Nomura Holdings Inc. said in a statement today. The company also sold 70 billion yen of similar-maturity 1.467 percent debt, data compiled by Bloomberg show.
Billionaire Masayoshi Son’s Softbank offered in October to buy a 70 percent stake in Sprint Nextel to enter the U.S. market and create the world’s third-biggest carrier. The Tokyo-based company was the first to offer Apple Inc.’s iPhone in Japan and is relying on the popularity of the devices to tap 840 trillion yen of cash and bank deposits owned by the nation’s households in helping to pay for the deal.
“This deal is typical of the company that often turns to individual bond investors for funding,” Hiroaki Hayashi, who manages 1.5 trillion yen of fixed-income investments at Fukokushinrai Life Insurance Co. in Tokyo, said today in a telephone interview. “There is likely to be a considerable demand for the notes.”
Softbank last sold bonds in September, when it raised 110 billion yen, including 100 billion yen of 0.74 percent five-year notes targeting individuals, according to data compiled by Bloomberg. The extra yields to own the debt instead of government bond more than doubled to 142 basis points on Oct. 12 after reports of the deal, and traded at 156 yesterday, according to JS Price data.
Japanese households owned 1,510 trillion yen of financial assets, including 840 trillion yen of cash and bank deposits as of the end of September, according to the Bank of Japan. (8301)
Softbank has 186.6 billion yen of bonds maturing this year, including a 130 billion-yen retail bond due Sept. 17, according to data compiled by Bloomberg.
Standard & Poor’s and Moody’s Investors Service have put the Japanese company’s credit ratings under review for possible downgrade on concern the acquisition may undermine its financial strength. A downgrade of one step would bring the rating to a speculative, or junk, ranking at Moody’s.
The Sprint announcement came two weeks after Softbank agreed to acquire a stake in competing Japanese wireless provider eAccess Ltd. to help meet bandwidth demand from iPhone users. Sales of Apple phones and tablets have helped Softbank boost earnings.
The acquisition of Overland Park, Kansas-based Sprint’s 56.4 million subscribers would increase Softbank’s customer base to 96 million in the U.S. and Japan, the Japanese company said in October. The company’s biggest Japanese competitor, NTT DoCoMo Inc. (9437), has about 60.8 million subscriptions.
Softbank doubled net income to 65.9 billion yen as sales gained 7.1 percent to 923.7 billion yen during the three months ended Dec. 31, the company said Jan. 31.
The carrier gained 1.4 percent to 3,355 yen as of 1 p.m. in Tokyo trading, heading for its first gain in four days. The stock is up 6.9 percent this year, compared with the 9.3 percent gain by the benchmark Nikkei 225 Stock Average.
To contact the reporter on this story: Yusuke Miyazawa in Tokyo at firstname.lastname@example.org