Rakuten Group is preparing to issue 250 billion yen ($1.87 billion) in bonds, Nikkei learned on Friday, the largest one-time issuance in Japanese e-commerce company’s history as it struggles to overcome mounting costs in its mobile phone business.
The two-year bonds, with a maturity date of Feb. 10, 2025, will carry a coupon rate in the range of 2% to 4%. The bonds are scheduled to receive an A-rating from the Japan Credit Rating Agency on Jan. 27, when the company will also finalize the terms of the issuance.
The application period is from Jan. 30 to Feb. 9, with a payment deadline of Feb. 10. Rakuten has nicknamed the issuance “Rakuten Mobile Bonds,” as the funds raised will be used for working capital in its mobile phone business, according to the company.
At the end of December, Rakuten filed for shelf registration with the Tokyo finance bureau for a 300 billion yen bond issuance limit, to simplify some of the issuing procedures required later. This was amended on Friday.
Rakuten’s mobile phone unit continues to struggle. S&P lowered the company’s long-term issuer rating by one notch to BB in December, as slow performance has made it hard to raise capital, making it difficult for the company to meet development expectations.
In June, Rakuten issued 150 billion yen in straight bonds, also called Rakuten Mobile Bonds. In November, it issued $500 million in dollar-denominated, unsecured senior notes. Nikkie.Asia