SoftBank questions S&P after it cuts rating deeper into junk

By Sam Nussey

TOKYO (Reuters) -S&P Global Ratings cut SoftBank Group Corp's long-term rating deeper into junk territory on Tuesday, leading the Japanese tech investment conglomerate to question the downgrade.

S&P lowered SoftBank's rating to BB from BB-plus, citing SoftBank's exposure to unlisted companies that are susceptible to changes in the external environment.

"There is a marked lack of rationality in the explanation," SoftBank Chief Financial Officer Yoshimitsu Goto told Reuters.

SoftBank has sold down assets, including its stake in Chinese e-commerce giant Alibaba Group Holding Ltd 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. Furthermore, the technology stocks in which the company has primarily invested have been depressed for a prolonged period," S&P said in a note.

SoftBank CEO Masayoshi Son has said he would "play defence" with prudent financial management given 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.

SoftBank 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, but Goto said its issue with S&P was smaller.

"The magnitude of the problem is totally different from Moody's," he said.

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.

(Reporting by Sam Nussey and Satoshi Sugiyama, editing by Ed Osmond and Barbara Lewis)