S&P cuts Softbank rating after Sprint deal clears
TOKYO (AP) — Standard & Poor’s has cut Softbank’s credit rating to reflect increased financial risks following clearance of its $21.6 billion acquisition of Sprint Nextel Corp.
S&P says Monday it cut Softbank’s rating to BB+, which is the highest junk grade rating, from BBB. Softbank shares fell 3.4 percent in Tokyo.
The ratings agency says Softbank’s debt will increase substantially as a result of buying 78 percent of Sprint.
The Federal Communications Commission approved the Sprint deal on Friday.
S&P says Sprint, the third biggest U.S. wireless carrier, has weak cash-flow and high debt while Sprint’s acquisition of Clearwire will add to the financial burden on Japan’s Softbank.
But S&P expects Sprint’s profitability to improve under its new owner and says Softbank is supported by its strong market position in Japan.