UPDATE 1-RLPC-SoftBank raising Asia's biggest-ever loan

Thu Aug 8, 2013 8:19am EDT

* SoftBank trumps own record with record $20 bln equivalent loan

* Refinances $17 bilion bridge loan from Sprint acquisition

* Japanese and international banks keen to lend (Adds further loan details, background and context)

By Jacqueline Poh

HONG KONG, Aug 8 (Reuters) - Japanese wireless carrier SoftBank Corp is raising a jumbo $20 billion yen-equivalent loan, which is the biggest ever syndicated loan to be raised in the Asia Pacific region, banking sources said on Thursday.

Proceeds will refinance the one-year bridge loan from December 2012 that backed SoftBank's $21.6 billion acquisition of US-based telecom Sprint Corp, which is the biggest overseas acquisition by a Japanese company.

The original bridge loan, which totalled 1.65 trillion yen ($17.08 billion), was previously Asia's largest syndicated loan. It was subsequently reduced to 1.285 trillion yen after SoftBank raised a 370 billion yen bond to cover its investment in Sprint.

Bank of Tokyo-Mitsubishi UFJ, Deutsche Bank, Mizuho Corporate Bank and Sumitomo Mitsui Banking Corp are arranging the new jumbo loan and also led the original bridge loan.

The deal has been launched to a wider syndication and banks have been invited to join with minimum commitments of $500 million in yen.

SoftBank declined to comment.

The jumbo loan consists of a five-year tranche and a seven-year tranche and has amortising repayments throughout the life of the loan.

Pricing is based on a ratings grid and is less than 150 basis points (bps), sources said. SoftBank was recently downgraded to Ba1 and BB+ by Moody's Investors Service and Standard & Poor's.

The downgrades followed SoftBank's acquisition of Sprint which "will significantly weaken SoftBank's financial flexibility," Moody's said in a report in July.

The ratings agency also said that SoftBank will have to extend additional finance to help Sprint execute its large capital expenditure program of $16 billion for 2013 and 2014.

STRONG SUPPORT

Although the loan is unsecured and SoftBank has a non-investment grade credit rating, many Japanese and international banks are still keen to join the deal.

Japanese lenders view SoftBank as an A-rated credit, reflecting the views of domestic credit ratings agencies. Liquid Japanese banks are also cash-rich, particularly in yen, and eager to lend.

The deal is expected to be supported mainly by Japanese banks due to the relatively low margin for a non-investment grade company.

Foreign banks are also keen to lend due to the lack of internationally-syndicated deals from Japan and SoftBank's strong financial performance.

SoftBank is on track for a record annual profit and is projecting consolidated operating income of at least 1 trillion yen in the fiscal year ending March 31, 2014, according to its financial report on July 30.

Moody's July report also said that SoftBank has improved its financial metrics in the last two years, especially its ability to generate higher EBITDA on the back of stronger revenue growth and a steady improvement in its operating margin despite heightened competition.

SoftBank started talking to lenders in February about refinancing the bridge loan. Banks have until the end of August to commit to the new loan.

On Tuesday, SoftBank said it has bought an additional 0.73 percent of Sprint's common stock, increasing its stake in the US wireless operator to 79.07 percent.

Sprint's shares have risen more than 20 percent since early July when the acquisition was completed.

In 2011, SoftBank raised a self-arranged 550 billion yen term loan, which matures in March 2015, to refinance a 1.45 trillion yen whole business securitisation deal that the company put in place to finance its leveraged buyout of Vodafone Group Plc's Japanese subsidiary, Vodafone KK.

That deal paid a margin of 90bps over Tibor based on the company's BBB- rating at that time. ($1 = 96.5850 Japanese yen) (Editing by Tessa Walsh)