SoftBank seen issuing 700 billion yen in bonds in fiscal 2014
TOKYO -- SoftBank is expected to issue around 700 billion yen ($6.75 billion) in domestic straight bonds for retail investors in the year through March 2015.
The leading Japanese telecommunications company sees strong demand among retail investors due to persistently low interest rates. The estimated value represents a large increase over the 400 billion yen issued last fiscal year. The proceeds will help SoftBank redeem existing bonds reaching maturity and boost cash on hand to invest in growth, including through acquisitions.
The company will apparently set the issuance terms for 300 billion yen of the bonds as soon as Thursday and offer them in mid-May. Expected to have a five-year maturity, the bonds will likely carry a rate of around 1.5%, barring major interest rate fluctuations.
Nomura Securities, Daiwa Securities and Mizuho Securities are among the likely underwriters.
SoftBank's issuance last June of 400 billion yen in corporate bonds for individual investors was the largest ever for a nonfinancial company. Their rates far outstripped those on time deposits at major banks.
"The high yield was well received, and they quickly sold out," said Director Yoshimitsu Goto.
While hopes are high that Japan will soon pull out of a protracted deflationary cycle, interest rates are expected to stay low as the Bank of Japan continues unconventional easing measures.
Nearly 100 billion yen of outstanding SoftBank bonds are set to mature this fiscal year. As those include debt with rates of around 3-4%, this issuance will lower the company's interest costs.
"We'd like to go on periodically issuing bonds for retail investors in the future," Goto said.