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SoftBank's drop deepens as Sprint shares hit multiyear low
[TOKYO] SoftBank Group Corp dropped for the fourth straight day after shares of Sprint Corp., the US wireless carrier it controls, fell to multiyear lows on growing pessimism about the the company's ability to pay down debt.
SoftBank dropped 3.2 per cent to 4,544 yen in Tokyo on Thursday, the lowest level since April 2013. Sprint closed 7.2 per cent down in New York at the lowest in more than two years. Its bonds led declines among junk-rated debt Wednesday.
Billionaire Masayoshi Son has struggled to turn around Sprint since the purchase of a controlling stake in 2013, with the value of his biggest acquisition ever declining by US$8.8 billion since the deal. SoftBank has said it may book a charge of as much as US$1.2 billion when reports earning next month.
Including today's trading, SoftBank's market value has dropped by 1.92 trillion yen (S$23.6 billion) this year.
Sprint's US$1.5 billion of 7 per cent bonds due 2020 plunged 8.25 US cents on the dollar to 60.75 US cents in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. That's the lowest since issuance in August 2012.
Moody's Investors Service lowered Sprint's credit rating in September to B3 from B1, or six levels below investment grade, citing "brutal competition" in the US wireless industry that will pressure even the strongest operators. The ratings firm also cast doubt on the wireless company's ability to refinance more than US$12 billion of debt coming due in the next five years without additional support from its majority shareholder - SoftBank Group.