Japan-Based SoftBank Group Corp.#s Proposed Senior Unsecured Global Notes Rated #BB+#

Stocks and Financial Services Press Releases Thursday March 8, 2018 11:45
TOKYO--8 Mar--S&P Global Ratings

TOKYO (S&P Global Ratings) March 8, 2018--S&P Global Ratings today said it has assigned its 'BB+' issue rating to Japan-based telecommunications and internet company SoftBank Group Corp.'s (SoftBank; BB+/Negative/--) proposed senior unsecured U.S. dollar notes and proposed senior unsecured euro notes. SoftBank plans to use these notes mainly to exchange multiple senior unsecured U.S. dollar notes and senior unsecured euro notes it issued in 2015 (2015 notes). Yesterday it said it has offered to exchange and has solicited consent to amend the 2015 notes.

The issue rating on the proposed notes is equal to the long-term corporate credit rating on SoftBank. This is because the ratio of the issuer's total secured debt plus its subsidiaries' debt to the issuer's total debt (priority debt ratio) stands below 50%, the threshold for us to consider notching down the issue rating.

Although major subsidiary SoftBank Corp., a Japan-based telecommunications operator, will guarantee the notes, the guarantee could be released before the proposed notes mature under certain circumstances, such as the guarantor no longer guaranteeing any of SoftBank's indebtedness. However, these guarantee conditions do not affect our issue rating on the proposed notes, because we base the rating on the aforementioned analysis and the rating does not rely on the upstream guarantee. Changes to the terms and conditions on the 2015 notes would make the guarantee conditions the same as those on the proposed notes but, because of our aforementioned rationale, we do not expect the changes to affect our rating on the 2015 notes.

Our corporate credit rating on SoftBank reflects its stable profitability, supported by its strong market position as a diversified telecommunications operator in Japan, and its good business and geographic diversity. The negative rating outlook reflects our view that SoftBank has adopted an increasingly aggressive financial policy, as demonstrated by tolerance of accelerated investment in its fund business. As a result, we see a greater likelihood of key financial ratios for the company deteriorating more substantially than we had assumed.

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