This is an interesting point. Do you have data / references? I’m very curious about this. I’ll search on my own too.

Cursory searching is revealing:

- Softbank "now responsible for more than half of all corporate and financial debt issuance" in Japan [1]

- Softbank's own bond data [2]

- Seeking Alpha's review of SB's bond [3]

[1] https://www.ft.com/content/24c4a8a8-7885-11e9-bbad-7c18c0ea0...

[2] https://group.softbank/en/corp/irinfo/stock/bond/

[3] https://seekingalpha.com/article/4308627-forget-uber-wework-...

Issuance, not holdings? What fraction of outstanding debt in Japan?

If Uber and WeWork both go to zero, how big a hit is that?

Issuance should be roughly equal to holdings for retail investors in Japan as the market for those only exist because JGBs pay nothing.

I think if both of those went under it looks extremely bad but SoftBank Group gets a dividend from the SoftBank Corp (telecom) that has enough dependable operating income that should be good for servicing debt. Additionally, SoftBank Group is still trading at a discount to its BABA stake + everything else.

There definitely is an increasing chance of a perfect storm where multiple bad things happen that could quickly evaporate this whole thing:

- China gets worse domestically with or without trade war ratcheting up and BABA is collateral damage

- S/TMUS merger fails from domestic regulatory pressure (just had TX and NV AGs settle but other states are not on board still)

- UBER, WEWORK, and others (Oyo?) get dragged and there are some feedback loops on other portfolio companies

- Funding pressures. There was an article on FT about domestic banks being skeptical on lending more to SOFTBK. Stuff like that becomes a self-fulfilling prophecy after a while and can quickly spiral out of control. That said, SOFTBK has something like 20bn cash on hand so that should only really become a problem if there's prolonged weakness.

- Vision Fund 2 more than likely not going to be able to raise its envisioned amount. Obviously no one wants to touch this right now. I think there's definitely been internal discussions on how some of this $ would be used to bail out VF1 portfolio companies through acquisitions. Additionally, if I had to make a forecast, there's not enough companies out there right now that could absorb $100bn of VC money and be able to profitably exit.

I think the biggest problem going on right now is that all of these companies were built upon endlessly flowing capital and business models were based on that. Now that everyone is focused on "profitability", I'm not sure if you can easily pivot some of these business models without completely imploding businesses. None of these companies have created anything that consumers cannot live without. VC-subsidized luxuries brought to the masses can have a very fleeting existence; people got around before UBER. If any of these companies ever try to raise prices in an attempt to display profitability, they could be in a rude awakening for ECON101 price elasticity/inelasticity lesson.

Isn't SoftBank able to get negative yielding loans (essentially paid to borrow money) from the BoJ also? And doesn't the BoJ own a signficant portion of SoftBank stock?

The Japanese economy sounds like a dystopian Capitalist hellhole to me. I'm hoping I'm just wrong about everything, and it's actually fine.

The BoJ owns 9.78% of Softbank. https://group.softbank/en/corp/irinfo/stock/ownership/

Softbank cannot borrow directly from the BoJ because it is not an actual bank. However, they recently issued bonds at a 1.38% rate: https://economictimes.indiatimes.com/markets/bonds/gone-in-1...

Welcome to NIRP.

Thankfully, Softbank's internal exposure to the Vision Fund is quite limited. Also, they have a sizeable liquid stake in Alibaba worth $100 billion they can unwind if they start needing cash. I don't think retail SoftBank investors are in imminent danger, but I do think the BoJ eating up so much liquidity in sovs is pretty crazy.

> The BoJ owns 9.78% of Softbank. https://group.softbank/en/corp/irinfo/stock/ownership/

Are you sure? I just Googled 'The Master Trust Bank of Japan Ltd.' (the only listed shareholder with 9.78% ownership) and it seems to be owned by Mitsubishi Trust Bank and a bunch of other banks, and nothing to do with the BoJ...

http://www.opac1.com/bank/detail.php?bcd=5960 yeah according to this it's owned by Mitsubishi Trust, Nippon Life Insurance, Meiji Life Insurance, Touyou Trust (which became a chunk of UFJ Trust), and ... I think Deutsche Bank?

So like a bunch of fingers in this pie. A good or a bad thing depending on your perspective.

The BoJ does not own 9.78% of SOFTBK; the Master Trust Bank of Japan does. Here is their website:

https://www.mastertrust.co.jp/

I don't know much about them but from a brief look they look comparable to BNY Mellon.

That 100 billion Alibaba valuation looks fishy.

It’s complicated, and has a long history. The Japanese industrial complex has generally been more tightly linked than the West. (Perhaps cultural reasons?). Suppliers and customers frequently had large cross-holdings. The system works when the goals are well known, but can prove tough to change.

After WW2 the US occupational forces were going to dismantle the giant corporate groups (Kerietsu) but decided to keep them in place to strengthen Japan as a counterbalance to North Korea.

Despite this, the links weakened over time. While there are cases like the ones with SoftBank, this isn’t a new phenomenon.

And before we judge the system too harshly, in 30 years Japan went from a post-nuclear dystopia to a first world economy. It’s managed to keep the economy moving despite an aging population and very low birth rates. There are lots of “But X...” though it’s still a fascinating economy.

How much of that is savers and how much the japanese central bank? From what I know they are the ones doing the buying.