SoftBank Borrows $8B, Backed by Its Stake in Alibaba,Sources Say
SoftBank Group Corp. borrowed about $ 8 billion through a margin loan owned by Alibaba Group Holding Ltd. held by the Japanese technology giant for the purpose of increasing financial flexibility, according to people familiar with the issue.
This loan, guaranteed only by Alibaba’s holdings, will not be reflected in the group’s debt and may help reduce the potential rankings, the people say, declining to be identified as discussions. kept secret. New finance may also remove an obstacle to the listing of domestic telecom unit SoftBank Corp., which has been used as collateral for its previous debt, one of whom said.
Bank of America Corp, BNP Paribas SA, Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley, Nomura Holdings Inc., Societe Generale SA and UBS Group AG. Loan agreement, the people say.
SoftBank can not reach out to comment. Representatives from Bank of America, Goldman Sachs, Morgan Stanley, Nomura and BNP Paribas declined to comment, while other lenders did not respond to calls and emails, or did not comment immediately.
The involvement of Wall Street’s leading banks and European lenders in finance reflects their continued desire for this debt associated with blue chip companies, despite losses. of banks on margin lending linked to Steinhoff International Holdings NV. Retailers have lost more than 90 percent of their market value after disclosing late accounting errors in the past few years.
A successful IPO of the SoftBank mobile unit – only after the agency can prove its independence by canceling the debt guarantee – can help parents raise capital and reduce some of the burden. debt of 15.8 trillion yen ($ 147 billion) at the end of last year. A list in Tokyo may increase by more than 2 trillion yen, people with knowledge of the issue said this year.
Masayoshi Son, who announced he wants to list within a year, is seeking to separate SoftBank’s operations into investment and telecom funds as it moves into businesses, from motorbike to insurance. .
SoftBank Group’s debt risk jumped to the highest level in nearly two years after successfully exchanging US $ and euro-denominated bonds for new securities, allowing mobile phone units to issue security. loan guarantee. This swing helped ease the IPO, prompting bond investors to worry that listing the unit could reduce the amount of cash to the parent company.
In a loan, the borrower will hold the debt by pledging a property with the knowledge that he or she will pay if the collateral value decreases. Lenders can usually sell some collateral if the borrower can not provide cash. Banks compete for these deals because of the fees involved in structured finance.