UPDATE 2-Moody's downgrades SoftBank by two notches
* Moody’s says considering further downgrade
* SoftBank says move “will cause substantial misunderstanding”
* Has requested Moody’s withdraw its ratings
* Said this week will sell assets to fund share buyback
* Shares have rallied 55% since buyback announcement (Adds comment from Moody’s analyst, share performance)
By Sam Nussey
March 25 (Reuters) – Ratings agency Moody’s downgraded SoftBank Group Corp on Wednesday by two notches to Ba3, as the tech conglomerate moves to sell down core parts of its portfolio into a volatile market to offset the poor performance of speculative tech bets.
Moody’s said here it was also reviewing SoftBank for a further downgrade, leading SoftBank to take the unusual step of asking Moody’s to withdraw its ratings.
The decision is based on “excessively pessimistic assumptions” and “will cause substantial misunderstanding among investors” and “result in significant confusion for issuers”, SoftBank said in a statement.
SoftBank said this week it will raise as much as $41 billion through asset sales to fund its biggest ever buyback, after investors sold shares due to concern over high leverage and souring bets on unproven startups via the $100 billion Vision Fund.
SoftBank’s shares have rallied 55% since the buyback announcement, which will see the group retire almost half its shares. But its ability to engineer the sale of part of a portfolio that includes Chinese ecommerce giant Alibaba is under scrutiny as the coronavirus outbreak rattles markets.
“Asset sales will be challenging in the current financial market downturn, with valuations falling and a flight to quality,” Moody’s analyst Motoki Yanase said.
SoftBank has declined to identify the assets that will be sold or monetized and plans to make the transactions over the next four quarters.
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