Lenders ready to back SoftBank
Loans Record facility offers attractive returns in negative-rate environmentBY WAKAKO SATOSOFTBANK GROUP’s ¥2.6trn
(US$23bn) refinancing – Asia’s
largest syndicated loan – is
expected to generate enough
interest from both domestic and
international lenders, despite its
size and junk status credit rating.
The loan, which exceeds
Australian shopping mall giant
Westfield Group’s A$22bn
(US$20.4bn then) financing
in July 2014, will be used to
refinance part of the Japanese
technology and telecoms
group’s debt, including several
large acquisition financings.
More than 20 domestic and
international banks have been
invited to join the financing,
including existing lenders ANZ,
Aozora Bank, Bank of America
Merrill Lynch, Barclays, BNP
Paribas, Commerzbank, Deutsche
Bank, Development Bank of Japan,ING Bank, JP Morgan, Mitsubishi
UFJ Trust & Banking, Mizuho Trust
& Banking, Norinchukin Bank,
Shinsei Bank and Sumitomo Mitsui
Trust Bank.
The four mandated lead
arrangers and bookrunners
Credit Agricole, Mitsubishi UFJ
Financial Group, Mizuho Bank and
Sumitomo Mitsui Banking Corp are
expected to hold over 50% of
the financing.
“As you can see, they have
been active in M&A, SoftBank
is the most remarkable name
in Japan,” said a source at an
international bank.
In September 2016, SoftBank
sealed a ¥1trn (US$9.8bn)
acquisition financing to
back its £24.3bn (US$32bn)
purchase of UK chip designer
ARM Holdings. The wireless
carrier also raised a ¥1.98trn
two-tranche loan – considered
Japan’s largest syndicatedfacility until now – in
September 2013 to refinance a
one-year bridge that backed its
US$20.1bn acquisition of US-
based telecom provider Sprint
in December 2012. SoftBank’s
new financing refinances these
two loans.
Among other loans to be
refinanced with the new facility
are an acquisition financing that
backed the US$1.26bn purchase
of a 57% stake in US cellphone
distributor Brightstar in 2013.
SoftBank is a regular in
the capital markets, offering
lenders attractive ancillary
business opportunities.
Last month, it completed
a US$6.05bn-equivalent
senior bond offering which
comprised two dollar pieces
and a euro portion. Proceeds
were used to repay loans. In
July, the conglomerate printed
a US$4.5bn dollar-denominatedhybrid corporate bond offering.
SoftBank’s new amortising
facility is split into four
tranches – a ¥650bn three-
year term loan, a ¥600bn
five-year term loan, a ¥1.1trn
seven-year term loan and the
¥250bn seven-year working
capital facility, paying margins
of 80bp, 125bp, 160bp and
175bp over Tibor, respectively,
based on SoftBank’s Ba1/BB+
(Moody’s/S&P) ratings.
Although the interest
margins are much tighter than
the two-year loan raised for
the ARM Holdings acquisition,
which pays a margin of
125bp over Tibor, pricing
is still attractive to many
international lenders. This is
because corporate loans for top
Japanese companies typically
pay razor-thin pricing amid a
negative interest environment.
“Pricing doesn’t look that
great, but it’s not too tight
when you look at the average
life,” said a senior banker at
another international bank.
The pricing levels for theAustralia sets ABS record
Structured Finance Expanding buyside drives asset class to post global crisis peaksBY JOHN WEAVERSAustralia has set a post-global
financial crisis high for asset-
backed securities after last
week’s RMBS sales from
HERITAGE BANK and CITIGROUP
took year-to-date issuance
to A$30.9bn (US$24.0bn),
exceeding 2014’s previous
annual record of A$30.8bn.
Rising investor demand
and tightening spreads have
tempted regular issuers to raise
funds more frequently and in
bigger sizes while new entrants
have appeared, including
Latitude which in March
printed the country’s first
master-trust ABS backed against
credit card receivables.
Australia’s securitisation
market has benefited from
increased investor appetite out
of Europe and Japan, while
support from domestic assetmanagers has been steady
since the crisis, according to
Tim Burgess, ABS syndication
manager at National Australia
Bank, which typically heads
the securitisation league table
Down Under.
“The ripple effects of
quantitative easing have
prompted a renaissance in
European demand from relative
value accounts driven by
the decline in European ABS
spreads that have hit record
lows this year,” Burgess said.
“In addition, we have seen
new Japanese entrants, firstly,
in major bank RMBS and then
increasingly across a broader
array of issuers and asset
classes as they became more
comfortable.”
Burgess said offshore
investors had bought up to
50% of major bank RMBS in
recent years with the majorityof this demand coming from
Japan and Europe. The offshore
take-up for non-major bank
RMBS and ABS ranges from the
high teens to 50%.
Lionel Koe, director for
securitisation originations at
NAB, said the expanded interest
from both domestic and
offshore investors, coupled with
the relative value proposition
of Aussie ABS, had helped drive
down yields.
Among other reasons for
the increased supply are
new net stable funding ratio
requirements and clarity
from APS 120, the Australian
Prudential Regulatory
Authority’s new simplified
securitisation framework. The
latter has encouraged major
banks to issue capital relief
RMBS structures, whereby
risk is transferred via the
inclusion and distribution ofsubordinated tranches, which
are more attractive to the issuer
than funding only RMBS.
Looking ahead, domestic
bank-balance-sheet demand
for RMBS could grow next year
after the APRA announced a
significant increase in the RBA
Committed Liquidity Facility to
A$248bn in 2018 from A$223bn
this year.
The CLF is made up of assets,
including Triple A rated ABS
and SSA Kangaroos, as well as
senior unsecured securities
from authorised deposit-taking
institutions, rated at least BBB+,
that can be used as collateral
to meet shortfalls in liquidity
coverage ratios.
These LCR shortfalls are
due to the lack of Level 1
high-quality liquid assets for
Basel III purposes in Australia- namely Commonwealth and
state government bonds, plus
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