Standard & Poor cut SoftBank Corp's debt rating to two levels to "junk" status. S&P said that the financial risks SoftBank made by acquiring Sprint Nextel Corp, a US wireless carrier and Sprint's planned buyout of Clearwire Corp were the reasons for the downgrade.

The cut encouraged a slide in SoftBank's stocks. However, experts said the drop was a result of profit-taking. This was after the shares climbed in hope of the Sprint contract.

In March, S&P gave a warning to SoftBank that it would cut its rating to BB+ if the Sprint deal was finalized. BB+ was the highest non-investment grade.

Senior telecoms analyst at BNP Paribas in Tokyo, Hiroshi Yamashina, said that the downgrade was unlikely to boost financing price for SoftBank. Consequently, SoftBank was expected to be dependent on funding from the banks in Japan.

In May, SoftBank issued JPY400 billion or US$3.96 billion in Japan's retail bonds. While in April this year, it increased the size of the dual-tranche by US$3.3 billion.