Sony planning 1st US dollar bond sale since 1998
What's the story
Sony is gearing up for its first US dollar bond sale since 1998. The tech giant has hired Bank of America and Morgan Stanley to hold talks with debt investors that started on Monday. The planned offering is expected to be a two-tranche note with maturities of five and 10 years, according to Bloomberg.
Funding details
Bond offering to fund general corporate purposes
The upcoming bond offering by Sony, as per a Securities and Exchange Commission filing, is intended to raise funds for general corporate purposes. This move comes as part of a wave of high-grade bond sales in the US. Companies are rushing to lock in historically tight credit spreads amid expectations that the Federal Reserve may start raising interest rates.
Market history
Sony raised $1.5B in 1998
Sony last sold US dollar bonds in 1998, raising $1.5 billion at the time. A former US unit of the Tokyo-based company tapped the market in 2001. The current trend of Japanese companies selling record amounts of notes amid funding-diversification efforts is a response to narrowing rate differentials, and rising domestic rates due to policy tightening by the Bank of Japan.
Business focus
Credit rating upgraded to A+
Last year, Sony spun off its insurance and banking firm to concentrate on its entertainment business, which includes games, music, and films. S&P Global Ratings upgraded Sony to A+ in March, four notches below AAA. The company's new bonds are expected to be rated A2 by Moody's Ratings and A+ by S&P.