Citing Sprint Deal, S&P Lowers Softbank Credit Rating

Following the news that Japan's SoftBank had received FCC approval to move forward with its acquisition of Sprint Nextel , Standard & Poor's has lowered its long-term corporate credit and senior unsecured debt rating of SoftBank two spots, from BBB to BB+, the credit rating service announced today.

The new, lower debt rating assumes SoftBank's $21.6 billion acquisition of Sprint will be completed later this month, S&P said, and reflects a "significant financial risk profile following the merger." SoftBank's increased debt used to finance the Sprint acquisition and Sprint's "weak cash flow generation, and high debt ratios," were both cited by S&P as financial concerns for SoftBank.

In contrast to SoftBank's rating decline, S&P noted it has a "stable" outlook for the Japanese wireless provider, expecting that "Softbank's domestic mobile and other businesses will likely grow steadily and that Sprint Nextel's operating performance will likely improve gradually, in part reflecting cost reductions and other benefits of the merger."

Additionally, S&P said it is removing debt ratings for SoftBank's four, domestic bond issuances "at the company's request."

-- Material from The Associated Press was used in this report.

The article Citing Sprint Deal, S&P Lowers Softbank Credit Rating originally appeared on

Fool contributor Tim Brugger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story