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S&P cuts Softbank rating after Sprint deal clears

Updated at: 07/08/2013 10:05 AM
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(AP) TOKYO - Standard & Poor’s has cut Softbank’s credit rating to reflect increased financial risks following clearance of its $21.6 billion acquisition of Sprint Nextel Corp.

S&P says Monday it cut Softbank’s rating to BB+, which is the highest junk grade rating, from BBB. Softbank shares fell 3.4 percent in Tokyo.

The ratings agency says Softbank’s debt will increase substantially as a result of buying 78 percent of Sprint.

The Federal Communications Commission approved the Sprint deal on Friday.

S&P says Sprint, the third biggest U.S. wireless carrier, has weak cash-flow and high debt while Sprint’s acquisition of Clearwire will add to the financial burden on Japan’s Softbank.

But S&P expects Sprint’s profitability to improve under its new owner and says Softbank is supported by its strong market position in Japan.

(Copyright 2013 by The Associated Press. All Rights Reserved.)