S&P Global Ratings cut SoftBank Group’s long-term rating deeper into junk territory on Tuesday, citing its exposure to unlisted companies that are susceptible to changes in the external environment.
The move came after SoftBank sold down assets including its stake in Chinese e-commerce giant Alibaba Group to stabilise its balance sheet as the value of its portfolio falters.
“[The sale of its shares] have eroded the proportion of listed assets in its portfolio,” S&P said in a note, lowering SoftBank’s rating to BB from BB-plus.
“Furthermore, the technology stocks in which the company has primarily invested have been depressed for a prolonged period,” the note added.
SoftBank CEO Masayoshi Son has pledged to play “defence” with prudent financial management amid weakness in tech valuations.
“It is extremely regrettable that our financial soundness was not properly assessed, and we will continue our dialogue with S&P,” SoftBank said in a statement.
S&P said a listing for chip designer Arm, which has become a primary preoccupation for Son, would improve asset liquidity.
“We have strongly urged S&P to consider an upgrade once the proposed initial public offering of Arm is completed,” SoftBank said.
SoftBank previously fell out with Moody’s Investors Service over its assessment of the conglomerate and in 2020 took the unusual step of asking the agency to withdraw its ratings.
- Reuters, with additional editing by Vishakha Saxena