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SoftBank Outlook Upgraded on Lower Leverage, Arm Transparency

Source: Softbank

Tokyo, Japan - SoftBank Group's credit outlook was revised to stable from negative by Moody's Investors Service, citing reduced leverage and increased transparency following the initial public offering (IPO) of semiconductor unit Arm.

Moody's maintained its Ba3 corporate family rating on SoftBank while changing the outlook. 

The agency said the successful listing of Arm in September increased the percentage of SoftBank's portfolio in publicly traded assets. 

Combined with stakes in telecom firm SoftBank Corp and Alibaba Group, more than 60% of SoftBank's holdings are now listed. 

That dwarfs the conglomerate's debt.

Moody's said SoftBank's "good liquidity" can cover maturities over the next five years. 

However, "reliance on dividends" and "low-interest coverage" remain rating constraints.

According to Moody's, SoftBank had about $45 billion in cash at the end of September, which is partly funding new startup investments. 

It is reportedly in talks with OpenAI co-founder Sam Altman about possible funding for chip startups.

The outlook revision follows more conservative financial management under CEO Masayoshi Son, Moody's said. 

Market value-based leverage fell to 41% as SoftBank halted new investments and paid down debt.

SoftBank objects to Moody's unsolicited ratings and has previously tried to withdraw them. 

On Monday, it repeated calls for an "immediate" halt to Moody's ratings.

Downgrades could come if liquidity fails to cover debt or leverage rises significantly. 

But increased transparency and lower risk appetite suggest steps are being taken to avoid that, Moody's said.