SoftBank Gets Over $7 Billion in Jumbo Offshore Bond Deal

(Bloomberg) -- SoftBank Group Corp. priced the second-biggest offshore bond deal from Asia this year, raising about $7.35 billion in a dual-currency debt offering.

The Japanese technology giant sold $3.85 billion of dollar-denominated debt and 2.95 billion euros ($3.5 billion) of notes on Wednesday, making it second in size only to a deal by Nippon Telegraph & Telephone Corp. in February. It was the first overseas debt deal by SoftBank since 2018.

SoftBank posted the biggest-ever quarterly profit by a Japanese company earlier this year, driven by gains at its investment arm. The company, founded and led by Masayoshi Son, came to market at an ideal time with yields on junk-rated dollar debt in the U.S. at a record low and tech stocks near a record high. Still, the prospect of higher interest rates ahead poses a potential headwind for one of Japan's most heavily indebted companies.

SoftBank, which has a speculative-grade score of BB+ from S&P Global Ratings, said it plans to use the proceeds from Wednesday's bond deal to repay existing debt and for general corporate purposes. The issuer received the equivalent of more than $16 billion of demand from over 400 investors for the offering, according to a spokesman for the company.

SoftBank's first priority for cash will likely remain “speculative and high-risk investments,” potentially via stake purchases in private companies through one of its investment funds, CreditSights' analysts Mary Pollock and Oliver Burke wrote in a note this week. They wrote that they preferred exposure to short-duration debt of the company given less potential for repricing risk if Son's strategy or shift in risk sentiment surprise to the downside for creditors.

SoftBank has sold about $12.7 billion of bonds this year, making it the biggest junk-rated corporate issuer of debt in the world in the first half, according to data compiled by Bloomberg.

It priced 405 billion yen ($3.6 billion) of notes in June in the biggest note sale of the year in its home market. Japan Credit Rating Agency rates the issuer and its recent yen note offerings as investment grade.