Sony plans first dollar-bond sale in nearly three decades

Sony Group Corp was still marketing the original PlayStation when it last tapped the US investment-grade bond market. Almost three decades later, it’s readying a comeback.

The Japanese conglomerate will sell two tranches of senior fixed-rate bonds, according to a person familiar with the matter who asked not to be identified. For the five-year note, underwriters sounded out a spread of about 70 basis points over the same maturity of US Treasuries and a 90 basis-point spread for a 10-year bond issue. The sale may be priced later today.

Underwriters Bank of America Corp and Morgan Stanley held calls with debt investors on Monday, a person said.

The offering, which Sony said in a Securities and Exchange Commission filing will raise cash for general corporate purposes, is part of a rush of high-grade bond sales in the US. Companies have moved to lock in historically tight credit spreads while expectations grow that the Federal Reserve may begin to raise interest rates.

Among other firms poised to tap the market this week is SpaceX, which is expected to raise at least $20 billion to repay some debt.

Sony Group last sold bonds in US dollars in 1998, when it raised $1.5 billion, according to data compiled by Bloomberg. A former US unit of the Tokyo-based firm tapped the market in 2001.

Selling dollar-denominated debt is a more-attractive option for Japanese companies now that policy tightening by the Bank of Japan has put its benchmark interest rate at the highest level since 1995. Firms have been offering a record amount of euro-denominated notes amid funding-diversification efforts as rate differentials have narrowed.

Auto-parts maker Denso Corp on Monday sold a $500 million investment-grade dollar note, after conglomerate Mitsubishi Corp. raised $1 billion earlier this month. In the eurobond market, Toyota Motor Corp priced €1 billion ($1.14 billion) of debt on Monday. NTT Finance is also considering an offering of bonds denominated in a combination of dollars, euro and pounds.

Sony last year spun off its insurance and banking firm to focus on its entertainment business, which includes everything from games to music and films. S&P Global Ratings in March upgraded Sony to A+, four notches below AAA, citing an outlook for strong earnings and cash flows.

The company’s new bonds are expected to be rated A2 by Moody’s Ratings and A+ by S&P, the person said.

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