Softbank might have a junk-level credit rating and is fresh off a stock market beating this week, but banks have never felt safer lending to the telecommunications operator-turned venture capital giant.
The price of a five-year Softbank credit default swap dropped from 2.9 percent last year to about 1.8 percent this month, a sign of growing confidence the Tokyo-based firm won’t default on its debt, according to the Wall Street Journal.
One factor could be the massive fees banks reap from a relationship with Softbank. The company paid nearly $900 million in investment banking fees last year, more than any other firm by far.
Softbank is taking punishment from its 16.3 percent stake in Uber, which tumbled in value since it went public last week. In turn, Softbank saw its own stock price contract by more than 11 percent this week.
But other companies it backs, like Guardant Health and the Indian hotel booking app Oyo, have fared better and helped Softbank maintain investor confidence, the Journal reported.
Originally a technology company, Softbank took on a new life in 2017 when it launched its $100 billion Vision Fund, backed by Saudi Arabia’s sovereign-wealth fund. Last week, it announced its plans to launch another fund of the same size. [WSJ] — Alex Nitkin