Founder & CEO Bond Angle, LLC, Bond Angle, LLC

Vicki Bryan

Founder & CEO Bond Angle, LLC

Bond Angle, LLC

Insightful commentary and analysis on bond markets and market movers, including financial, economic, and industry catalysts and management shenanigans. 

High yield market investment research

Credit

Sold! Softbank is said to be closing in on a deal to sell <a href="https://www.smartkarma.com/entities/arm-holdings-plc" target="_blank" rel="noopener">Arm Holdings (ARM LN)</a> to <a href="https://www.smartkarma.com/entities/nvidia-corp" target="_blank" rel="noopener">NVIDIA Corp (NVDA US)</a> for more than $40 billion in cash and stock in a deal that could be announced as soon as Monday, according to reports out today by <a href="https://www.wsj.com/articles/softbank-nearing-deal-to-sell-arm-holdings-to-nvidia-for-more-than-40-billion-11599928360?mod=hp_lead_pos1" target="_blank" rel="noopener">The Wall Street Journal</a> and <a href="https://www.ft.com/content/6bfe40a5-2426-4743-98cd-6fed9dd01b98" target="_blank" rel="noopener">Financial Times</a>.
This finally may be some good news for Softbank's investors, shaken by news last week that it had launched a <a href="https://www.ft.com/content/75587aa6-1f1f-4e9d-b334-3ff866753fa2" target="_blank" rel="noopener">massive options program so large it helped move markets</a> on stocks it just bought. 
This was funded with cash Softbank had said it must protect against conditions too risky to allow it to execute promised stock buybacks and debt repayment to repair its damaged balance sheet (read more in <a href="https://www.smartkarma.com/insights/softbank-s-son-feeling-the-force-with-options-funded-with-cash-it-had-pledged-to-protect" target="_blank" rel="noopener">Softbank's Son "Feeling The Force" With Options Funded With Cash It Had Pledged To Protect</a> on 9/8/20).
I warned last week Softbank had deliberately withheld and misrepresented material information about such a dramatic change in strategy direction and risk in its earnings presentation to investors just weeks ago.
On Saturday, Softbank's top investors went straight to the top to find out why—the answer is troubling, but not surprising.
<div class="content-highlight">
Read on for Bond Angle commentary.
</div>

Sold! Softbank is said to be closing in on a deal to sell Arm Holdings (ARM LN) to NVIDIA Corp (NVDA US) for more than $40 billion in cash and stock in a deal that could be announced as soon as Monday, according to reports out today by The Wall Street Journal and Financial Times.
This finally may be some good news for Softbank's investors, shaken by news last week that it had launched a massive options program so large it helped move markets on stocks it just bought. 
This was funded with cash Softbank had said it must protect against conditions too risky to allow it to execute promised stock buybacks and debt repayment to repair its damaged balance sheet (read more in Softbank's Son "Feeling The Force" With Options Funded With Cash It Had Pledged To Protect on 9/8/20).
I warned last week Softbank had deliberately withheld and misrepresented material information about such a dramatic change in strategy direction and risk in its earnings presentation to investors just weeks ago.
On Saturday, Softbank's top investors went straight to the top to find out why—the answer is troubling, but not surprising.

Read on for Bond Angle commentary.


Softbank Wrapping up Arm Sale While Wrestling With Alarmed Investors

APAC IPOs & Placements

Zhen Zhou, Toh

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div><a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> (SBG) is looking to raise about US$11bn by selling some of its shares (10%) in <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> (SBC). Post sell down, SBG will still hold about 2bn shares (about 42% stake) in SBC.</div><div>In this insight, we will look at the deal dynamics, recent performance of the company, and run the deal through our deal framework.</div><div>We have previously looked at the May placement, the potential selldown (post announcement selling assets to fund buyback) and its 2018 IPO in:</div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/softbank-corp-placement-overhang-removed-but-raising-more-than-initially-planned" target="_blank" data-smartkarma-citation="insights:42680" rel="noopener">Softbank Corp Placement - Overhang Removed but Raising More than Initially Planned</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/softbank-corp-placement-smaller-than-expected-but-overhang-weighs" target="_blank" data-smartkarma-citation="insights:39614" rel="noopener">Softbank Corp Placement - Smaller Than Expected, but Overhang Weighs</a> </li>
<li>
<a href="https://www.smartkarma.com/insights/softbank-group-driven-placement-softbank-corp-sell-down-will-be-supported-by-yield" target="_blank" data-smartkarma-citation="insights:37792" rel="noopener">Softbank Group-Driven Placement  - Softbank Corp - Sell Down Will Be Supported by Yield</a> </li>
<li>Valuation from a retail investor POV -  <a href="https://www.smartkarma.com/insights/softbank-ipo-review-attractive-from-a-retail-perspective-could-provide-short-term-upside" target="_blank" data-smartkarma-citation="insights:26422" rel="noopener">Softbank IPO Review - Attractive from a Retail Perspective, Could Provide Short-Term Upside</a>
</li>
<li>Valuation from an institutional investor POV - <a href="https://www.smartkarma.com/insights/softbank-corp-ipo-review-yield-ensured-demand-may-not-guarantee-performance" target="_blank" data-smartkarma-citation="insights:26280" rel="noopener">Softbank Corp IPO Review - Yield Ensured Demand May Not Guarantee Performance</a>
</li>
<li>Updates from prospectus - <a href="https://www.smartkarma.com/insights/softbank-corp-ipo-review-updates-from-the-prospectus-segment-breakdown-capex-and-risks" target="_blank" data-smartkarma-citation="insights:25943" rel="noopener">Softbank Corp IPO Review - Segment Breakdown, Capex, and Risks</a>
</li>
<li>Operating metric comparison - <a href="https://www.smartkarma.com/insights/softbank-telecom-pre-ipo-higher-yield-to-compensate-for-poorer-metrics" target="_blank" data-smartkarma-citation="insights:25842" rel="noopener">Softbank Telecom Pre-IPO - Higher Yield to Compensate for Poorer Metrics</a>
</li>
<li>Impact of Rakuten entry and FCF and dividend sustainability analysis - <a href="https://www.smartkarma.com/insights/softbank-telecom-pre-ipo-all-about-the-yield" target="_blank" data-smartkarma-citation="insights:25756" rel="noopener">Softbank Telecom Pre-IPO - All About the Yield</a>
</li>
<li>Company background and overview - <a href="https://www.smartkarma.com/insights/softbank-telecom-pre-ipo-review-vision-is-needed-to-arrive-at-us-90bn-valuation" target="_blank" data-smartkarma-citation="insights:25289" rel="noopener">Softbank Telecom Pre-IPO Review - Vision Is Needed to Arrive at US$90bn Valuation</a>
</li>
</ul></div>

Softbank Group (9984 JP) (SBG) is looking to raise about US$11bn by selling some of its shares (10%) in Softbank Corp (9434 JP) (SBC). Post sell down, SBG will still hold about 2bn shares (about 42% stake) in SBC.In this insight, we will look at the deal dynamics, recent performance of the company, and run the deal through our deal framework.We have previously looked at the May placement, the potential selldown (post announcement selling assets to fund buyback) and its 2018 IPO in:

Softbank Corp Placement - Overhang Removed but Raising More than Initially Planned 

Softbank Corp Placement - Smaller Than Expected, but Overhang Weighs 

Softbank Group-Driven Placement  - Softbank Corp - Sell Down Will Be Supported by Yield 
Valuation from a retail investor POV -  Softbank IPO Review - Attractive from a Retail Perspective, Could Provide Short-Term Upside

Valuation from an institutional investor POV - Softbank Corp IPO Review - Yield Ensured Demand May Not Guarantee Performance

Updates from prospectus - Softbank Corp IPO Review - Segment Breakdown, Capex, and Risks

Operating metric comparison - Softbank Telecom Pre-IPO - Higher Yield to Compensate for Poorer Metrics

Impact of Rakuten entry and FCF and dividend sustainability analysis - Softbank Telecom Pre-IPO - All About the Yield

Company background and overview - Softbank Telecom Pre-IPO Review - Vision Is Needed to Arrive at US$90bn Valuation



Softbank Corp Placement - Quick Update - Wide Discount from Undisturbed but Don't Expect Much

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Event-Driven

The Japanese language Nikkei had an <a href="https://www.nikkei.com/article/DGXLASFL10HM9_Q0A910C2000000/" target="_blank" rel="noopener">article</a> out yesterday after the close discussing the possibility of a Softbank MBO. Of course, with Softbank you really never know, but to us this smells like an attempt to drive a short squeeze. We discuss why below.

The Japanese language Nikkei had an article out yesterday after the close discussing the possibility of a Softbank MBO. Of course, with Softbank you really never know, but to us this smells like an attempt to drive a short squeeze. We discuss why below.

Softbank Group – Funding Secured by Masayoshi Musk?

<a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> was revealed on Friday as the massive NASDAQ whale helping to drive unprecedented option volume in recent weeks with its multi-billion dollar call-buying spree in the biggest tech names, as reported by <a href="https://www.ft.com/content/75587aa6-1f1f-4e9d-b334-3ff866753fa2" target="_blank" rel="noopener">Financial Times</a> and <a href="https://www.wsj.com/articles/softbanks-bet-on-tech-giants-fueled-powerful-market-rally-11599232205" target="_blank" rel="noopener">The Wall Street Journal</a> which confirmed speculation Thursday by <a href="https://www.zerohedge.com/markets/speculation-emerges-over-identity-mystery-marketwide-call-buyer" target="_blank" rel="noopener">Zero Hedge</a>.Softbank's option trades added to $40 billion in call-buying over the past month traced to retail investors. The resulting frenzy netted Softbank <a href="https://www.ft.com/content/53aa19bb-fc9a-46fd-aafd-4bc3669ab161" target="_blank" rel="noopener">$4 billion in option trading gains—on paper—</a>on its own <a href="https://www.wsj.com/articles/softbanks-bet-on-tech-giants-fueled-powerful-market-rally-11599232205" target="_blank" rel="noopener">$50 billion notional exposure</a>. By comparison, Softbank's newly acquired long positions in <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a>, <a href="https://www.smartkarma.com/entities/alphabet-inc-cl-c" target="_blank" data-smartkarma-citation="entities:11369:1" rel="noopener">Alphabet Inc Cl C (GOOG US)</a>, <a href="https://www.smartkarma.com/entities/microsoft-corp" target="_blank" data-smartkarma-citation="entities:15273:1" rel="noopener">Microsoft Corp (MSFT US)</a>,  and <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> are worth just <a href="https://www.ft.com/content/3eec59a3-cb51-487c-aacd-68a0c7e46f2f" target="_blank" rel="noopener">$2 billion</a>, almost all that's left of the $10 billion Softbank spent late in the June quarter buying and selling mostly tech stocks at heady prices. Those holdings now are also subject to sharp declines triggered when Softbank's option scheme was revealed. Sure enough, Softbank <a href="https://www.ft.com/content/9e5827e9-893a-453e-b28d-88c1c0adc9d5" target="_blank" rel="noopener">lost $9 billion in market value</a> on Monday.There's plenty of intense scrutiny underway to understand these trades and what their impact ultimately proves to be. I'm more interested in Softbank's drastic change in strategy and its alternative deployment of cash from $40 billion raised in stock fire sales forced by its wary banks and legacy mega-investors who cut him and Softbank off after decades of seemingly endless billions in available funding when his recklessness netted Softbank and Vision Fund tens of billions of dollars in record losses. This certainly is not what Softbank told investors to expect mere weeks ago.Instead, Softbank's actions signal arrogance, or desperation, or worse—that CEO Masayoshi Son feels unrestrained and back in his Star Wars Zone with $40 billion in fresh cash.<div class="content-highlight">Read on for a Bond Angle deep dive into the belly of Softbank, The Whale, and what Son feels free to do with its $40 billion in cash that was pledged to bolster Softbank's bloodied balance sheet.</div>

Softbank Group (9984 JP) was revealed on Friday as the massive NASDAQ whale helping to drive unprecedented option volume in recent weeks with its multi-billion dollar call-buying spree in the biggest tech names, as reported by Financial Times and The Wall Street Journal which confirmed speculation Thursday by Zero Hedge.Softbank's option trades added to $40 billion in call-buying over the past month traced to retail investors. The resulting frenzy netted Softbank $4 billion in option trading gains—on paper—on its own $50 billion notional exposure. By comparison, Softbank's newly acquired long positions in Amazon.com Inc (AMZN US), Alphabet Inc Cl C (GOOG US), Microsoft Corp (MSFT US),  and Tesla Motors (TSLA US) are worth just $2 billion, almost all that's left of the $10 billion Softbank spent late in the June quarter buying and selling mostly tech stocks at heady prices. Those holdings now are also subject to sharp declines triggered when Softbank's option scheme was revealed. Sure enough, Softbank lost $9 billion in market value on Monday.There's plenty of intense scrutiny underway to understand these trades and what their impact ultimately proves to be. I'm more interested in Softbank's drastic change in strategy and its alternative deployment of cash from $40 billion raised in stock fire sales forced by its wary banks and legacy mega-investors who cut him and Softbank off after decades of seemingly endless billions in available funding when his recklessness netted Softbank and Vision Fund tens of billions of dollars in record losses. This certainly is not what Softbank told investors to expect mere weeks ago.Instead, Softbank's actions signal arrogance, or desperation, or worse—that CEO Masayoshi Son feels unrestrained and back in his Star Wars Zone with $40 billion in fresh cash.Read on for a Bond Angle deep dive into the belly of Softbank, The Whale, and what Son feels free to do with its $40 billion in cash that was pledged to bolster Softbank's bloodied balance sheet.

Softbank's Son "Feeling The Force" With Options Funded With Cash It Had Pledged To Protect

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Last Week in Event SPACE: Toshiba, Softbank, Cardinal Resources, Sembcorp, Intouch, SingTel, 58.Com

Japan

SoftBank Group Corp. provides telecommunication services. The Company also operates ADSL (Asymmetric Digital Subscriber Line) and fiber optic high-speed Internet connection, e-Commerce businesses, and Internet based advertising and auction businesses.

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Softbank Group (9984 JP)

Softbank Wrapping up Arm Sale While Wrestling With Alarmed Investors

Sold! Softbank has agreed to sell Arm Holdings (ARM LN) to NVIDIA Corp (NVDA US) for more than $40 billion in cash and stock in a deal that could...

Vicki Bryan

Softbank Corp Placement - Quick Update - Wide Discount from Undisturbed but Don't Expect Much

Softbank Group (9984 JP) (SBG) is looking to raise about US$11bn by selling some of its shares (10%) in Softbank Corp (9434 JP) (SBC). Post sell...

Zhen Zhou, Toh

Softbank Group – Funding Secured by Masayoshi Musk?

The Japanese language Nikkei had an article out yesterday after the close discussing the possibility of a Softbank MBO. Of course, with Softbank...

Mio Kato

Softbank's Son "Feeling The Force" With Options Funded With Cash It Had Pledged To Protect

The market is eager to know what Softbank plans to do with a burgeoning war chest from bigger and bigger stock sales. The better question is why...

Vicki Bryan

Last Week in Event SPACE: Toshiba, Softbank, Cardinal Resources, Sembcorp, Intouch, SingTel, 58.Com

Last Week in Event SPACE ... Plus, other events, CCASS movements and Mood Spins. (This insight covers specific insights & comments...

David Blennerhassett

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