Not All Upgrades Are Welcome: Moody’s Still Labels SoftBank Junk

(Bloomberg) – Rating upgrade is usually a reason for celebration. So Moody’s ratings are Japan’s Softbank Group Corp. When increasing the rating for the company, the company gave hair?

In 2020, Softbank withdrew a pessimistic rating request. Although Moody still decides to meet the company’s debt as a “unwanted note .. On Wednesday, he raised this rating from BA3 to BA2. In the reaction, Softbank attacked the rating, saying that it was “only without a reasonable fact, based on subjective assumptions and hypotheses.

While Moody’s degree of debt increased, the rating still labeled Softbank as an out -of -investment note, called “insignificant ında in the bond world.

Fujiwara Capital Co. CEO Taketoshi Tsuchiya said that Moody’s confirms Softbank’s speculative degree status. However, Softbank – funds that provide funds to profit and use bonds worth for several years – saw the degree as slightly. Tsuchiya said he implies that he could mislead the markets. He believes that Softbank is the real reason for being sad.

Is rating criticism rare?

Especially not. During the global financial crisis, there was a response to rating companies that gave excessive generous ratings to the mortgage -backed securities that then default. During the sovereign debt crisis of Europe, governments accused the rating companies of decreasing ratings and worsening their market turmoil. When Moody cut off the US government’s credit rating in May, the White House National Economic Council Director Kevin Hassett exploded as “backward”.

Do the system have flaws?

Many agencies use a “exporter payment” model where a company or government pays the rating company to evaluate the loan of the debt. This provides more access to financial information to the rating company, while raising concerns about potential conflicts of interest. However, in the case of Softbank, the rating was not required – the company did not pay for rating and refused to provide financial information. As a result, it is easier to claim that rating is deprived of a foundation.

UBP Investments Portfolio Manager Zuhair Khan said, the structure of the rating agency system is very full of conflict of interest, ”he said. “This is a good example of who and how the ratings are paid.

Rating and Investment Duties

In Japan, many regulations and investment authorities require investment degree status to purchase bonds. In the USA and elsewhere, the high -efficiency bond market is much more developed and global applications are different.

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