SoftBank’s bonds slumped and CDS spreads spiked following the collapse of Silicon Valley Bank (SVB). The move comes as market participants evaluate its exposure to SVB, given that the Son-led company has more than $140bn invested into startups. SoftBank’s 5.25% 2031s dropped 2.6% to 82.193 cents on the dollar while its 6.875% Perps dropped 3.8% to 83.683 cents on the dollar, the lowest since mid-January for both bonds. Its CDS rose for a third consecutive day on Tuesday as it jumped to 355bps, the highest level since January 20 this year.
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As per a SoftBank spokesperson, the collapse of SVB will have minimal impact on its Vision Fund portfolio as most constituent companies have cash buffers. It also said the company’s own finances will not be affected in any way. Jefferies analyst Atul Goyal said in a note to investors, “It is quite likely that this brings forward the ‘day-of-reckoning’ for the private equity/venture capital-funded universe, and may force PE funds including SoftBank to mark down private books sooner than they’d like to.”
