NJ5 on 10 December 2008
According to bloomberg, Sony is going to try to raise money by selling bonds.
The reason is that $2.7 billion of their existing debt has to be paid back by Dec. 18. They have enough cash to pay back that debt, but it would eat one third of their cash reserves. Their credit rating has also been downgraded.
Dec. 10 (Bloomberg) -- Sony Corp., the world’s second- largest consumer-electronics maker, is preparing to sell its first bond in almost three years to help refinance maturing debt, a company official said.
The timing and amount of bonds to be sold in Japan haven’t been decided, said the official, who declined to be identified before an official announcement. The Tokyo-based company will use proceeds from the planned sale to help cover the costs of redeeming 250 billion yen ($2.7 billion) in convertible bonds coming due Dec. 18, the official said.
The offering would test demand for Japanese corporate debt after the credit crisis led the world’s second-largest economy into its first recession since 2001 and drove down November corporate bond sales 45 percent from a year earlier. Sony, which announced a reorganization plan yesterday, is turning to the bond market as falling demand for electronics erodes earnings.
“For lots of companies, issuing a straight bond would be difficult,” said Nobuo Kurahashi, an analyst at Mizuho Investors Securities Co. in Tokyo. “As long as the terms aren’t extreme, it’s not a negative.”
The company, led by Chief Executive Officer Howard Stringer, yesterday said it will eliminate 16,000 jobs as part of plans to reduce costs by more than 100 billion yen annually and said a “much” larger-than-anticipated deterioration in the economy may force it to revise its profit targets.
Sony rose 1.1 percent to close at 1,917 yen on the Tokyo Stock Exchange, paring its drop for the year to 69 percent. The Nikkei 225 Stock Average climbed 3.2 percent.
Cash
“It’s better to issue a straight bond than to try and redeem the convertible bond just using cash on hand,” Kurahashi said.
Sony had 700.9 billion yen in cash on hand as of the end of September. The company last sold bonds in February 2006, when it raised 100 billion yen, according to data compiled by Bloomberg.
Moody’s Investors Service today lowered the outlook for Sony’s A2 debt rating to stable from positive, citing risks associated with poor market conditions. Sony’s restructuring plans would help “mitigate negative impacts” from the global economic slowdown, Moody’s said.
“If the bond terms are too severe, they can think of other ways to raise funds,” said Hideyuki Suzuki, an analyst at Morningstar Japan K.K.
Nomura Holdings Inc., Nikko Citigroup Ltd. and Mitsubishi UFJ Financial Group will co-manage the planned sale, the Sony official said.
The timing and amount of bonds to be sold in Japan haven’t been decided, said the official, who declined to be identified before an official announcement. The Tokyo-based company will use proceeds from the planned sale to help cover the costs of redeeming 250 billion yen ($2.7 billion) in convertible bonds coming due Dec. 18, the official said.
The offering would test demand for Japanese corporate debt after the credit crisis led the world’s second-largest economy into its first recession since 2001 and drove down November corporate bond sales 45 percent from a year earlier. Sony, which announced a reorganization plan yesterday, is turning to the bond market as falling demand for electronics erodes earnings.
“For lots of companies, issuing a straight bond would be difficult,” said Nobuo Kurahashi, an analyst at Mizuho Investors Securities Co. in Tokyo. “As long as the terms aren’t extreme, it’s not a negative.”
The company, led by Chief Executive Officer Howard Stringer, yesterday said it will eliminate 16,000 jobs as part of plans to reduce costs by more than 100 billion yen annually and said a “much” larger-than-anticipated deterioration in the economy may force it to revise its profit targets.
Sony rose 1.1 percent to close at 1,917 yen on the Tokyo Stock Exchange, paring its drop for the year to 69 percent. The Nikkei 225 Stock Average climbed 3.2 percent.
Cash
“It’s better to issue a straight bond than to try and redeem the convertible bond just using cash on hand,” Kurahashi said.
Sony had 700.9 billion yen in cash on hand as of the end of September. The company last sold bonds in February 2006, when it raised 100 billion yen, according to data compiled by Bloomberg.
Moody’s Investors Service today lowered the outlook for Sony’s A2 debt rating to stable from positive, citing risks associated with poor market conditions. Sony’s restructuring plans would help “mitigate negative impacts” from the global economic slowdown, Moody’s said.
“If the bond terms are too severe, they can think of other ways to raise funds,” said Hideyuki Suzuki, an analyst at Morningstar Japan K.K.
Nomura Holdings Inc., Nikko Citigroup Ltd. and Mitsubishi UFJ Financial Group will co-manage the planned sale, the Sony official said.
My Mario Kart Wii friend code: 2707-1866-0957
