Rakuten Returns to the U.S. Market with a $1.25 Billion Junk Bond Offering

Japanese tech conglomerate Rakuten Group, valued at $11.89 billion, is returning to the U.S. high-yield bond market with a $1.25 billion five-year junk bond offering to improve its financial situation.

Rakuten, which has over 70 businesses in sectors including e-commerce, travel, digital content, fintech, and mobile, intends to sell dollar bonds with the debt size and terms said to be determined by market demand after it made a $1.8 billion sale in January of bonds that yielded 12.125%, as reported by Bloomberg. Also, early pricing discussions are for a yield in the mid-10% area, according to sources with knowledge of the matter.

Rakuten has been pressurizing financial markets this year to raise funds to pay down its obligations. However, credit markets are still wary of the company as they believe it has a significant risk of defaulting on its debt obligations in Japan. The fundraise, if successful, will be used by the company to repurchase debt due later this year and beyond.