Even so, the risk of non-payment in the coming 12 months has risen to 0.5% from about 0.3% at the start of the year, according to the model, which tracks metrics including share price, debt and cash flow. Moody’s has a Ba1 rating on SoftBank, its highest speculative grade, and a B3 rating on its US subsidiary Sprint Corp., five levels lower. Moody’s Yanase said there is a “very high hurdle” for it to count the deal as having any equity content, as it doesn’t provide such partial credits to company rated at non-investment grade. JCR reaffirmed SoftBank’s rating at A- last month, citing factors including an improvement in earnings at Sprint, the strength of SoftBank’s domestic telecommunications business, and the hybrid securities. “Although it is good to have lower-ranked securities in the capital structure, it is going to be a part of total debt anyway,” said Moody’s Yanase.

Source: Mint September 05, 2016 03:56 UTC