JPY300 billion in debt affected
Tokyo, March 11, 2011 -- Moody's Japan K.K. has upgraded to Baa1 (sf) from Baa3 (sf)
its ratings on the Class B1 Loan and Class B2 Note of SOFTBANK MOBILE
Corp. Mobile Telecommunication Business Securitization.
Details follow:
Deal Name: SOFTBANK MOBILE Corp. Mobile Telecommunication
Business Securitization
Issuer: WBS Funding Company (Class B1 Loan), J-WBS
Funding K.K. (Class B2 Note)
JPY 125.0 billion Class B1 Loan, Upgraded to Baa1 (sf);
previously on November 30, 2006, assigned definitive rating
of Baa3(sf)
JPY 175.0 billion Class B2 Note, Upgraded to Baa1 (sf);
previously on November 30, 2006, assigned definitive rating
of Baa3(sf)
Class: Class B1 Loan and Class B2 Note
Total Issue Amount: JPY 300.0 billion
Coupon: Floating (Class B1 Loan), Fixed (Class B2 Note)
Issued Date: November 30, 2006
Final Maturity Date: November 10, 2019 (Class B1 Loan),
November 15, 2019 (Class B2 Note)
Underlying Asset: Trust Beneficial Certificates of a specified monetary
trust (Tokkin Trust) that are backed by secured loans payable by SBM (Class
B1 Loan), Class B2 Note Loan to WBS Funding (Class B2 Note)
Original Obligor: SOFTBANK MOBILE Corp. (SBM)
RATING RATIONALE
The rating actions are due mainly to the progress in the transaction's
debt redemption.
SBM's subscriber numbers grew from approximately 15 million in November
2006 (at deal issuance), to 25 million in February 2011.
ARPU (Average Revenue Per User) had been decreasing since the deal issuance,
but started improving gradually after 2009 due to an increase in data
ARPU. Debt Redemption Amount is proceeding ahead of the "management
case" (as stipulated in the transaction documents) because the steady
increase in subscriber numbers has contributed to the increase in business
cash flow generated by SBM.
Debt Redemption Amount since December 2009 has been increased highly and
the total debt balance had decreased to approximately JPY 796 billion
as of February 2011, from JPY1,442 billion at first.
Currently, the number of subscribers, as well as SBM's
EBITDA, exceeds Moody's initial expectations. The transaction's
leverage has substantially improved due to an increase in business cash
flow and decrease in debt balance.
When assuming SBM's future business cash flow, a key factor
to consider is whether SBM is able to retain or increase their subscribers
and ARPU in the highly competitive market. Capital expenditure
is also required to maintain telecommunication quality and to address
the higher data transmission speeds. Therefore, Moody's
has examined the debt repayment ability of the transaction, assuming
a certain stress scenario regarding future business cash flow and capital
expenditure. As a result, Moody's believes that the
Class B1 Loan and Class B2 Note (collectively known as, Class B)
are sufficient to achieve a higher rating than Baa3 (sf).
However, debt redemption of Class B only starts after full redemption
of Class A debt. Hence, it takes longer for Class B,
compared with Class A, to be affected by the volatility in business
cash flow which is the source of the debt repayment.
Considering the factors above, Moody's has upgraded the ratings
of Class B to Baa1 (sf).
The rating actions affect only Class B. The source of funds for
the debt redemption is cash flow generated through SBM's mobile
telecommunication business. Therefore, the transaction's
ratings are to a certain extent affected by SBM's credit quality.
As such, Moody's believes that current rating, A3 (sf),
is reasonable for Class A.
The principal methodology used in this rating was "Moody's Approach to
Rating Japanese Whole Business Securitizations" published on September
30, 2010, and available on www.moodys.co.jp.
Moody's did not receive or take into account a third-party
due diligence report on the underlying assets or financial instruments
related to the monitoring of this transaction in the past six months.
REGULATORY DISCLOSURES
For an explanation of the (sf) indicator, please see "Moody's
Structured Finance Rating Scale" on www.moodys.com.
The principal information used to prepare the credit rating comprised
Compliance Reports, Trustee Reports, Debt Reports, etc.
Information sources used to prepare the credit rating are the following:
parties involved in the ratings (the arranger, the original obligor,
etc.); parties not involved in the ratings; public information;
and confidential and proprietary Moody's information.
Measures taken to ensure the quality of this information include reviews
by a third party.
Moody's considers the quality of information available on the issuer
or obligation satisfactory for the purposes of maintaining a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Credit ratings are Moody's current opinions of the relative future credit
risk of entities, credit commitments, or debt or debt-like
securities. Moody's defines credit risk as the risk that an entity
may not meet its contractual, financial obligations as they come
due and any estimated financial loss in the event of default. Credit
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to: liquidity risk, market value risk, or price volatility.
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rating due to insufficient information, or for other reasons.
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Tokyo
Yumiko Kitaoka
Vice President - Senior Analyst
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Tokyo
Koji Kumamaru
MD - Structured Finance
Structured Finance Group
Moody's Japan K.K.
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SUBSCRIBERS: (03) 5408-4100
Moody's Japan K.K.
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Moody's upgrades SOFTBANK MOBILE's WBS Class B1 Loan/B2 Note