Sharp Corp.’s bond risk jumped the most since 2012 on waning prospects for a state-backed rescue.
The cost to insure debt in the Japanese supplier of displays to Apple Inc. rose 210 basis points to 751 on May 21, credit-default swap data from CMA show. That is the highest for a technology company in Asia and compares with the average for such companies of 122. Innovation Network Corp. of Japan plans to reject Sharp’s investment request on concern it would face opposition from Apple and regulators, a person familiar said.
The company, whose debt has ballooned to 1 trillion yen ($8.2 billion) since lower-cost rivals undercut its liquid-crystal display televisions, is also facing obstacles to an investment by Foxconn Technology Group. The Taiwanese maker of electronics including Apple iPhones has sought a more active role in Sharp management should it buy a 10 percent stake.
“There were many people in the market holding on to the hope that INCJ will be the sponsor to help Sharp spin off its LCD business,” said Yusuke Ueda, a Tokyo-based credit analyst at Bank of America Merrill Lynch. “With that possibility gone, Sharp is left with no choice but to ask Foxconn for money.”