Rakuten plans US$1 billion bond sale in debt extension effort
JAPANESE technology conglomerate Rakuten Group plans to sell a US dollar bond and repurchase notes maturing this year, as speculative-grade borrowers seize on robust investor demand and the company addresses its debt load.
The company said on Thursday (Jan 25) that as part of “proactive debt maturity efforts” it would issue three-year notes. Rakuten concurrently launched a tender offer for as much as US$1 billion of bonds maturing this year, of which there’s US$1.75 billion outstanding, according to data compiled by Bloomberg.
A US$1 billion non-callable bond due 2027 from Rakuten is expected to price next week, according to a source familiar with the matter who asked not to be identified because they are not authorised to speak about it..
A 2020 move into Japan’s saturated mobile phone market pulled Rakuten deeper into debt and sent its bonds to record lows last year. The company has been working to shore up its finances, including through selling equity in itself and several units. Rakuten said last month it was shedding 14 per cent of its online bank, which was listed last year.
After the US dollar-note sale and tender offer close, Rakuten plans to repurchase yen-denominated senior bond due to mature starting in 2024, it said.
The two dollar bonds part of the company’s tender offer both mature in November, have coupons of 10.25 per cent and 3.546 per cent. Rakuten “faces large refinancing needs and may need to pay up for funding in the next 12 months”, Bloomberg Intelligence analyst Sharon Chen wrote in a note last week.
The firm, which last sold bonds a year ago, is among a large batch of junk issuers tapping the market. January’s volume of nearly US$19 billion is on track to top the prior year’s total.
Rakuten chief executive officer Hiroshi Mikitani said this week that the company is ramping up marketing for its loss-making mobile unit and pitching wireless services to corporate partners. BLOOMBERG
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