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SoftBank to lighten interest burden with foreign bond buyback

$750m purchase will include dollar bonds with coupon of over 5%

SoftBank Group will use proceeds from its mobile unit's December IPO to reduce its debt. (Photo by Tsuyoshi Tamehiro)

TOKYO -- SoftBank Group will buy back around $750 million in euro- and dollar-denominated debt, seeking to ease its interest burden by reducing the balance of bonds with high interest rates.

The Japanese technology conglomerate plans to step up efforts to reduce its interest-bearing debt, using the roughly $20 billion raised from its mobile unit's December initial public offering.

Under a plan announced Wednesday, SoftBank will conduct tender offers to buy seven types of bonds with varying maturity dates and coupon rates, including a dollar bond maturing in 2027 with a coupon rate of 5.125% and a euro bond with a rate of 4% set to mature in 2029.

Through Jan. 23, SoftBank will feel out institutional investors to gauge the volume and price at which they are willing to sell. It will be flexible on the breakdown and prices, based on orders from investors, according to SoftBank. Transactions are expected to take place around Jan. 28. 

Amid a strong sense of risk aversion among investors in high-yield bond markets in Europe and the U.S., many SoftBank bonds are trading below par value. SoftBank intends to buy these bonds and book the difference in price as profit.

SoftBank's interest-bearing debt stood at 16.6 trillion yen ($152 billion) at the end of September. Foreign-currency bonds accounted for 1.5 trillion yen, of which around 5% will be bought back under the latest plan.

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