SoftBank To Repurchase $1.9B in Corporate Bonds As It Tries To Cut Down Debt

SoftBank Group Corp SFTBY will repurchase $1.9 billion of unsecured corporate bonds in an attempt to pare down debt. 

What Happened

Reuters reported that the company’s CEO Masayoshi Son is raising $41 billion to fund share buybacks and reduce debt after SoftBank reported an operating loss of $12.7 billion in 2019-20 on account of its various tech investments.

SoftBank expects to gain $5.6 billion from its sale of shares of T-Mobile US Inc TMUS and the revaluation of the shares held by the group.

The expected gains do not include a derivative liability from the call options received by Deutsche Telekom AG DTEGY, the majority shareholder in T-Mobile.

Why It Matters

The asset sale plan has led to Moody’s revising its outlook on SoftBank Group to “negative” from “ratings under review,” which in turn fueled a spat between the Japanese conglomerate and the rating agency. 

In May, SoftBank raised $11.5 billion by selling Alibaba Group Holding Ltd’s BABA stock to shore up its balance sheet. Son resigned from Alibaba’s board last week.

According to Reuter’s SoftBank has a large presence in Japan’s junk bond market, where it finds support from a familiar investor base as it operates the country’s third-largest mobile network.

Price Action 

On Friday, SoftBank OTC shares closed 0.47% lower at $25.34. On Monday, the company’s shares traded 1.44% higher at $50.63 at press time in Tokyo.