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

Softbank Short Targets and Re Cycle Reaction Support

Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

Credit

We view Softbank as “Low Risk” on the LARA scale, mainly as the company’s valuable assets more than compensate for its weak and deteriorating credit metrics, and the investment-holdco structure. Our view reflects Softbank's position as one of Japan's three major mobile telecommunications players, generating strong cash flows. The company's significant financial flexibility offsets risks associated with its high leverage. Softbank has a number of valuable assets, including Alibaba (rated A1), the Softbank Vision Fund (SVF) and Yahoo Japan. While technology firms tend to be volatile, Alibaba appears to have a solid position in China. In addition, Softbank has large unrealised gains on a number of its investments, including Alibaba, which alone is worth almost all of its debt combined. However, selling the Alibaba stake would incur a large capital-gains tax of over 20%. Hence, Softbank uses creative financing to raise funds from its stake, instead of pursuing outright stake sales. Our Credit Bias on Softbank is “Stable”, in view of the stable operations at key holdings. The losses in SVF1 were less than half of the gain by the Alibaba stake in H1/19-20. Asset values are still increasing, and Net Debt/Market Value remains healthy. We view Softbank’s corporate governance as “Weak” on the LAGA scale. Chairman, CEO and founder Masayoshi Son has too much control and influence, while the Board’s structure is weak. Other than that, we like the solid history as a listed company, with the absence of shareholder-unfriendly actions and reasonable levels of transparency, communication and disclosures.

  We view Softbank as “Low Risk” on the LARA scale, mainly as the company’s valuable assets more than compensate for its weak and deteriorating credit metrics, and the investment-holdco structure.   Our view reflects Softbank's position as one of Japan's three major mobile telecommunications players, generating strong cash flows. The company's significant financial flexibility offsets risks associated with its high leverage. Softbank has a number of valuable assets, including Alibaba (rated A1), the Softbank Vision Fund (SVF) and Yahoo Japan. While technology firms tend to be volatile, Alibaba appears to have a solid position in China. In addition, Softbank has large unrealised gains on a number of its investments, including Alibaba, which alone is worth almost all of its debt combined. However, selling the Alibaba stake would incur a large capital-gains tax of over 20%. Hence, Softbank uses creative financing to raise funds from its stake, instead of pursuing outright stake sales.   Our Credit Bias on Softbank is “Stable”, in view of the stable operations at key holdings. The losses in SVF1 were less than half of the gain by the Alibaba stake in H1/19-20. Asset values are still increasing, and Net Debt/Market Value remains healthy.   We view Softbank’s corporate governance as “Weak” on the LAGA scale. Chairman, CEO and founder Masayoshi Son has too much control and influence, while the Board’s structure is weak. Other than that, we like the solid history as a listed company, with the absence of shareholder-unfriendly actions and reasonable levels of transparency, communication and disclosures. 

Softbank Group

Softbank - Tear Sheet - Lucror Analytics