SoftBank Group Corp. is planning its second 2021 yen-denominated bond offering after recently posting the biggest quarterly profit ever for a Japanese company.
The technological conglomerateplans to issue 405 billion yen ($ 3.7 billion) of bonds, mainly targeting individual investors, according to a group statement Wednesday. SoftBank reported net profit of 1.93 trillion yen for the three months ended March 31, almost all ofinvestment in the new state-owned Coupang Inc.
Tech investment giant Masayoshi Son has seen a strong recovery in fortunes over the past twelve months, with SoftBank’s investment arm Vision Fund showing recent profits after being the source of its biggest loss one year ago. SoftBank has long relied on individual investors in Japan rather than institutions for most of its yen funding in the local bond market, benefiting from its strong brand awareness.
Some SoftBank bonds may pay individual investors an interest rate of around 3% at a time when depositors in Japan earn next to nothing on deposits due to the Bank’s negative interest rate policy. Japan. The average yield on investment-grade yen corporate debt is less than 0.4%, according to data compiled by Bloomberg.
The funds from the current offering will be used to repay existing debt, according to SoftBank’s statement on Wednesday. The Notes are expected to be BBB rated by Japan Credit Rating agency Ltd. and a price between 2.45% and 3.05% in June, according to SoftBank.
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The company plans to issue bonds that mature in 35 years but are repayable after five years. The Notes are hybrid securities and have characteristics similar to equity, such as an optional interest deferral provision and a payment priority subordinated to senior debt.
Accordingly, SoftBank expects the notes to be eligible to be treated as 50% equity of the rating companies JCR and S&P Global Ratings, according to the company. The notes also include a provision for premium interest so that the interest rate increases after five years.
The company valued 177 billion yen of notes in an institutional debt offering in January, which was its first bond sale in more than a year at the time.
(Updates with bond details and chart.)