S&P remarked:
it has lowered its ‘BBB’ long-term corporate credit and senior unsecured debt ratings on Softbank Corp. by two notches to ‘BB+’ and has removed the ratings from CreditWatch. We are withdrawing our debt ratings on the company’s domestic bond issuances (four issuances) at the company’s request. We base the rating action on our expectation that Softbank’s acquisition of U.S.-based Sprint Nextel Corp. (Sprint Nextel; B+/Watch Dev/–), the third-largest wireless service provider in the U.S., will close sometime in July, following various approvals including those of shareholders and the Federal Communications Commission (FCC). The outlook on our long-term corporate credit rating on Softbank is stable. Softbank and Sprint Nextel amended their merger agreement and increased the acquisition amount in response to a counteroffer Sprint Nextel received from U.S.-based satellite TV provider DISH Network Corporation, which expressed its willingness to acquire Sprint Nextel and equity method subsidiary Clearwire Corporation (CCC/Watch Pos/–), a U.S.-based wireless Internet service provider. These developments raise the acquisition cost and cash outflow from Softbank group. Nonetheless, Softbank’s strong internal cash flow generation and growing cash position provide some buffer to absorb the increased acquisition cost on a consolidated basis at the ‘BB+’ rating level, in our view. We base our ‘BB+’ long-term corporate credit rating on Softbank on our assessment that the group has a “satisfactory” business risk profile and a “significant” financial risk profile following the merger.
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