(Bloomberg) -- SoftBank Group Corp. plans to issue its biggest-ever yen bond in a test of whether individual investors will continue to lap up notes of one of the world’s most indebted firms.
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Billionaire Masayoshi Son’s technology conglomerate is marketing 550 billion yen ($4.8 billion) of seven-year subordinated notes, with the proceeds used to repay debt. The company has more than 400 billion yen of bond repayments due next month, according to data compiled by Bloomberg.
As a bellwether for the tech sector, SoftBank’s Vision Fund took a hit last year on the decline in value of public holdings such as Chinese ride-hailing giant Didi Global Inc. The cost of insuring the Japanese company’s debt against default surged, while its shares lost nearly 33% last year.
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SoftBank Group’s upcoming domestic bond issue may price at the higher end of its 2.15-2.75% guidance, given the large issue amount and its weakening credit profile. It priced a seven-year subordinated yen bond in September at 2.4%, but since then, adjusted loan-to-value has trended toward 35% vs. less than 30% in June.
- Sharon Chen and Hui Yen Tay, analysts
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But in a world of ultra-low interest rates, its bonds offer juicy returns. The company is something of a darling for retail investors in Japan because of Son’s reputation for entrepreneurship and its mobile carrier has a big presence.
That enthusiasm is reflected in SoftBank Group’s local credit score. The conglomerate has an A- investment-grade rating from Japan Credit Rating Agency, even as S&P Global Ratings assigns it a junk rating.
SoftBank has been the single-biggest issuer in the Japanese corporate bond market in the past decade, raising more than 6 trillion yen with the bulk of the funds coming from individual investors.
Its latest yen bonds are scheduled to price on Jan. 20, and the firm has given a range of 2.15％ to 2.75％ for the coupon, according to a filing from the company on Friday.
(Adds BI quote and detail throughout)
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