Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

Softbank Group Corp’s outlook has been revised to stable from negative by S&P while affirming the group’s BB+ rating. The outlook change comes on the back of sound decisions by the management of the group as it successfully reduced the group’s debt by JPY 1.5tn (~$14.47bn) by selling assets worth JPY 5.6tn (~$54bn) against a planned JPY 4.5tn (~$43.4bn). The sale has helped the group to improve its loan-to-value (LTV) ratio to ~18% as of September 30, down from 26% on March 31, 2020. The group had offloaded its stake mainly in Alibaba Group Holding Ltd, T-Mobile US Inc and its domestic telecommunication subsidiary, SoftBank Corp. Additionally, the group is also in talks to sell Arm Ltd to Nvidia Corp. SoftBank also has high liquidity as 70% of its portfolio is based on listed entities with Alibaba shares accounting for 50% of the portfolio. While the rating agency said that the group has adequate cash flows, it warned that the company’s debt of ~JPY 5.8tn ($55.93bn) as of September 30, 2020 could weigh heavily on its access to financing in case of adverse markets. The rating agency added, “The outlook revision is also based on our expectation that the company will maintain a relatively strong portfolio, from a liquidity and credit quality perspective, and financial ratios will remain commensurate with the issuer credit rating in the next one to two years.”

The outlook revision comes at a time when Bloomberg reported that Softbank Corp, SoftBank Group Corp’s wireless business is set for a transition with Masayoshi Son handing over the leadership to Ken Miyauchi. Son has since reduced the stake down to about 40% as the group is increasing its attention to financial investments. SoftBank’s bonds were slightly up. Its 5% 2028s and 4% 2029s were up 0.72 and 0.85 respectively to trade at 112.62 and 107.59.
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