On December 3, 2024, Rakuten Group Inc. initiated the marketing of its third dollar bond offering of the year, aiming to raise up to $550 million through subordinated notes with an attractive yield of 8.375%. This move comes as the company seeks to bolster its financial position amidst ongoing challenges, particularly from losses in its mobile network business. Rakuten has already issued $3.8 billion in dollar bonds earlier in 2024, reflecting its increasing reliance on the US high-yield market to navigate its financial landscape. [c0774091]
The company currently holds a single B rating from S&P Global Ratings, which recently revised its outlook on Rakuten's credit rating to stable from negative earlier in 2024. The proceeds from this latest bond offering are earmarked for redeeming yen notes that are set to mature next year, indicating a strategic move to manage its debt obligations effectively. [c0774091]
The backdrop for this bond issuance is favorable, as US junk bond spreads are at their lowest levels since 2007, coupled with expectations of potential rate cuts by the Federal Reserve. This environment may provide Rakuten with a conducive atmosphere to attract investors despite its financial hurdles. [c0774091]