Sony Group is preparing to re-enter the US dollar-bond market for the first time since 1998, with plans to issue a two-tranche note offering. The company has mandated Bank of America Corp. and Morgan Stanley to engage with debt investors, starting Monday, to raise funds for general corporate purposes.
The anticipated bond issuance will feature maturities of five and ten years, according to a source with direct knowledge of the matter. Sony's decision to sell dollar-denominated debt is influenced by the Bank of Japan's policy tightening, which has elevated its benchmark interest rate to the highest level since 1995.
Sony's last US dollar bond sale was in 1998, raising $1.5 billion. A former US unit of the Tokyo-based company also tapped the market in 2001. The new bonds are expected to be rated A2 by Moody's and A+ by S&P Global Ratings, reflecting Sony's strong earnings and cash flow outlook as highlighted by S&P's upgrade to A+ in March.
The bond market has seen significant activity from Japanese companies, with Denso Corp. recently selling a $500 million investment-grade dollar note and Mitsubishi Corp. raising $1 billion earlier this month. In the eurobond market, Toyota Motor Corp. priced €1 billion ($1.14 billion) of debt on Monday.
Sony's strategic shift last year, spinning off its insurance and banking firm to concentrate on its entertainment business, underscores its focus on leveraging its strengths in games, music, and films.
Background
Sony's return to the dollar-bond market is part of a broader trend where Japanese companies are diversifying their funding sources amid changing interest rate dynamics. The Bank of Japan's policy changes have made dollar-denominated debt more attractive, prompting firms to explore international bond markets.
As Sony re-enters the dollar-bond market, investors will be keenly watching the reception of its bond issuance and the impact of potential Federal Reserve rate hikes on market conditions. The outcome of this offering could set a precedent for other Japanese firms considering similar moves.
