Credit protection on Japanese Internet conglomerate Softbank Corp. blew out last week over uncertainties surrounding its upcoming acquisition of the local arm of Vodafone. Quotes on five-year default-swap protection moved from a mid-market level of around 260 basis points at the start of the week to a 250/450 bid-offer as offers shot out.
Not one of the more liquid names, Softbank CDS typically trade a few times every other week and the acquisition news has not sparked a noticeable pickup in trading activity. "This is being quoted at ridiculous levels," said a credit trading head at a European house in Tokyo.
Softbank is preparing an up to JPY2 trillion (USD16.9 billion) purchase of Vodafone K.K. from the parent U.K. company in a bid to obtain a significant presence in the mobile phone network business. Credit officials said financing plans have yet to be fully revealed and there are concerns regarding the level of debt. The acquisition is expected to be finalized near the end of the month and traders expect the credit's bid/offer to tighten over the next few weeks.
