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Capital Markets

SoftBank removes mobile unit's guarantee from $4bn bonds

Debt-laden parent promotes subsidiary's independence before IPO

SoftBank's planned $4.11bn bond float will go partly toward servicing another issuance from 2013.   © Reuters

TOKYO -- SoftBank Group looks to raise around 450 billion yen ($4.11 billion) through a June offering of straight bonds targeting Japanese retail and institutional investors and geared in part to servicing existing debt.

The deep-pocketed domestic mobile phone business, SoftBank Corp., will not guarantee the bonds as it has done in the past for its heavily indebted parent. With the holding company preparing to take the core unit public on the Tokyo Stock Exchange, the arm's independence will likely be subject to strict scrutiny. SoftBank Group has said it will begin gradually removing the unit's guarantees on already-issued bonds and loans once the listing gets the green light.

The Tokyo-based tech and investment powerhouse will float 410 billion yen of six-year bonds targeting retail investors, and another 50 billion yen worth for institutional investors. It aims to set annual coupon rates between 1.25% and 1.85% for both tranches. SoftBank Group expects demand from yield-hungry investors despite the lack of a guarantee from the mobile unit.

SoftBank Group's long-term bonds have earned an A- rating from the Japan Credit Rating Agency, but U.S.-based Moody's and S&P Global have given them riskier ratings of Ba1 and BB+, respectively. June's float is aimed in part at paying back roughly 400 billion yen worth of five-year bonds issued to retail investors in June 2013.

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