S&P Global Ratings changed SoftBank's (TYO:9434) outlook to negative from stable following a similar action on parent SoftBank Group (TYO:9984), according to a recent release.
The rating agency maintained the company's BBB long-term issuer credit rating.
S&P continues to believe the company's credit profile is somewhat limited by that of its parent, although there is no significant shift in its "bbb+" standalone credit profile.
SoftBank lacks a significant minority shareholder or another party to shield it from its parent's influence, S&P said.
Meanwhile, the company's standalone credit profile is two notches above the parent's group profile, partly due to S&P's view that the parent, under a deteriorating financial base, will not adversely intervene in its subsidiary.
For one, SoftBank's bank loans have financial covenants preventing the extension of financial support to the parent, S&P said.
The rating agency sees the company retaining a strong competitive edge and healthy financial numbers in the next one to two years, with steady earnings to gain support from a solid telecommunications business segment and a rising customer base in non-telecommunications businesses.
However, rising growth allocations in data centers and AI as well as persistently high shareholder returns will result in a smaller financial headroom, S&P said.
Notable changes in the parent's group credit profile or level of negative intervention on the subsidiary or the subsidiary's debt-to-EBITDA ratio and share in the telecommunications markets could lead to future rating actions.
Comments