Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

High Yield Experts

Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

Credit

We view Softbank Group (SBG) as "Low Risk" on the LARA scale. This is mainly due to the company's low leverage, as measured by LTV (11-16%), following a large asset monetisation programme (over USD 40 bn). Net debt has been significantly reduced since FYE 2019-20, thanks to substantial cash proceeds from the asset monetisation programme. However, the programme has led to increased asset concentration (i.e. with Alibaba accounting for a greater share), and could result in more volatile earnings. Additionally, the cash will likely be used for share buybacks and investments in immature and hence risky technology companies. Alibaba remains a key credit pillar for SBG, accounting for more than half of the group's EV. Alibaba is enjoying a significant tailwind in China, on the back of the surge in e-commerce and Cloud computing amid the COVID-19 pandemic. However, it is facing some regulatory overhang regarding its dominance in China. SBG's Alibaba stake alone is worth multiple times the net debt at the holdco, but selling it would incur a large capital-gains tax of 30%. Hence, SBG is employing some creative financing (using derivatives) to raise funds from its stake, instead of pursuing outright stake sales. The domestic telco, Softbank Corp, is the only significant cash generator consolidated into SBG. We see risks stemming from the group's reliance on the Alibaba stake (which may be volatile), and the use of cash from the asset monetisation programme. Our Credit Bias on SBG remains "Stable" on account of the significant cash and low net debt at the holdco. This should enable the company to weather the COVID-19 crisis and support trading of the SBG bonds. We view SBG’s corporate governance as "Weak" on the LAGA scale. We believe that Chairman, CEO and founder Masayoshi Son wields too much control and influence. Following the November 2020 replacement of three management officers and a representative of Saudi Arabia's Public Investment Fund with four independent directors, the Board's structure has improved and now appears adequate. However, only time will tell if the Board will be effective in reining in the aggressive Chairman.

  We view Softbank Group (SBG) as "Low Risk" on the LARA scale. This is mainly due to the company's low leverage, as measured by LTV (11-16%), following a large asset monetisation programme (over USD 40 bn). Net debt has been significantly reduced since FYE 2019-20, thanks to substantial cash proceeds from the asset monetisation programme. However, the programme has led to increased asset concentration (i.e. with Alibaba accounting for a greater share), and could result in more volatile earnings. Additionally, the cash will likely be used for share buybacks and investments in immature and hence risky technology companies.   Alibaba remains a key credit pillar for SBG, accounting for more than half of the group's EV. Alibaba is enjoying a significant tailwind in China, on the back of the surge in e-commerce and Cloud computing amid the COVID-19 pandemic. However, it is facing some regulatory overhang regarding its dominance in China. SBG's Alibaba stake alone is worth multiple times the net debt at the holdco, but selling it would incur a large capital-gains tax of 30%. Hence, SBG is employing some creative financing (using derivatives) to raise funds from its stake, instead of pursuing outright stake sales. The domestic telco, Softbank Corp, is the only significant cash generator consolidated into SBG. We see risks stemming from the group's reliance on the Alibaba stake (which may be volatile), and the use of cash from the asset monetisation programme.   Our Credit Bias on SBG remains "Stable" on account of the significant cash and low net debt at the holdco. This should enable the company to weather the COVID-19 crisis and support trading of the SBG bonds.   We view SBG’s corporate governance as "Weak" on the LAGA scale. We believe that Chairman, CEO and founder Masayoshi Son wields too much control and influence. Following the November 2020 replacement of three management officers and a representative of Saudi Arabia's Public Investment Fund with four independent directors, the Board's structure has improved and now appears adequate. However, only time will tell if the Board will be effective in reining in the aggressive Chairman. 

Softbank Group - Tear Sheet - Lucror Analytics