Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Dave B who wrote (47739)	7/24/2000 4:54:01 PM
From: Mihaela	Read Replies (1) \| Respond to of 93625

Sony to boost funds for PlayStation2 By Bloomberg News July 24, 2000, 12:10 p.m. PT TOKYO--Sony, maker of the world's fastest selling game console, plans to sell as much as $2.8 billion (300 billion yen) in bonds to ramp up production of chips for its PlayStation2 game machine to keep up with demand. Sony plans to sell bonds by 2002 in its first domestic bond sale in seven years and may tap the market sooner to beat the expected end of the Bank of Japan's policy of keeping interest rates near zero. It lodged an application with the Ministry of Finance Friday to sell the bonds. The timing of the registration "is probably because Japan's interest rate is so low," said Hitoshi Kuriyama, an analyst at Merrill Lynch Japan, who rates Sony stock a "buy." "I assume Sony chose to issue bonds," he said, because "that is most beneficial for the company." Sony's plan to tap the corporate bond market comes after NTT DoCoMo, Japan's biggest company by market value, prepares to sell as much as $9.2 billion in bonds over the next two years. Investors fret corporate bonds may lag government bonds if the central bank raises rates. The world's No. 2 maker of consumer electronic appliances applied to the Ministry of Finance for a so-called shelf registration, which allows a company to sell a specified amount of bonds anytime within two years of approval, which is usually given within eight days of registration. Analysts say the company needs to raise funds to expand its operations in digital broadcasting, microchip production for the PlayStation2 and mobile equipment production. The move comes as the Bank of Japan prepares to raise interest rate targets from the near-zero level of the last 17 months, making now a good time for Sony to lock in low rates and retire some pricier debt. Japan's interest rates are the lowest in the world, at 0.02 percent for the overnight bank lending rate. The comparable rate is 6.5 percent in the U.S. and 4.25 percent for the 11 European nations using the euro currency. Sony's long-term borrowings, which totalled 813.8 billion yen as of March, have dropped in the past five years, from 1,203.6 billion in March 1996. The company has outstanding debt with coupons, or monthly interest payments to bondholders, of up to 8.76 percent. While Sony wouldn't disclose the specific timing and size of any bond issue, it said it would eventually use the loan proceeds to repay debt and invest in its chipmaking operations and in its subsidiaries and other companies. "The shelf registration is to raise funds for investment in microchip operations, debt repayment and for loans and investment" in other companies, said Naoki Fujita, a company spokesman. The managers and specific terms of any bond issue have not been decided, Fujita said. In June, Sony said it will spend $1.15 billion to boost output of the chips used in the PlayStation2 as it now seeks to produce more of the game consoles than originally expected. The company has not yet disclosed how it will raise the money. Sony's Fujita declined to comment whether the company will raise the fund via a bond issue. Set-top boxes are receivers for digital broadcasting services, which will start in December, using satellites. "Sony needs funds for its PlayStation2 business and set-top box businesses,'' said Masahiro Ono, an analyst with UBS Warburg. Also last month, the company said it agreed to cooperate with Toshiba, the world's No. 1 maker of notebook PCs, and Matsushita Electric Industrial, the world's top electronics maker, on the development of advanced digital television receivers. "Sony has a high name value and a decent credit rating, so anything they issue would tend to make for a good buy," said Yousuke Miyake, senior portfolio manager at Nissay Asset Management. "On top of that, if they start to issue on a more regular basis it would create liquidity in the bonds, which is good for the market." Still, Miyake says a lot depends on what maturity and what amount of bonds are issued. Sony sold $1.5 billion in five-year global bonds in March 1998 through Goldman Sachs, J.P. Morgan Securities and Merrill Lynch. It sold $735 million in eight-year domestic straight bonds in September 1993 and $2.76 billion in domestic convertible bonds in February 1990 through Nomura Securities. news.cnet.com