April 6, 2018 / 2:43 PM / in 10 months

SoftBank borrows $8 billion using its Alibaba stake: Bloomberg

People walk behind the logo of SoftBank Corp in Tokyo December 18, 2014. REUTERS/Toru Hanai/Files

(Reuters) - Japan’s SoftBank Group Corp has taken a $8 billion margin loan backed by its stake in Chinese online retailer Alibaba Group Holding Ltd, Bloomberg reported, citing people familiar with the matter.

The loan, guaranteed solely by its stake in Alibaba, won’t be reflected in SoftBank’s debt, likely protecting it from a potential ratings downgrade, according to the report.

In a margin loan, a borrower secures the debt by pledging an asset with the understanding that they’d need to pay up if the value of the collateral declines, the report said.

SoftBank, which has a 29 percent stake in Alibaba, could not immediately be reached for comment, outside regular business hours.

Reporting by Akshara P in Bengaluru; Editing by Shailesh Kuber

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