Sprint Buyer SoftBank Sees Credit Rating Slashed and 2 Other Hot Stocks to Watch

Sprint Nextel Corp. (NYSE:S): Current price $6.25

Moody’s Investors Service has sharply downgraded SoftBank Corp.’s credit rating to junk, after the company finalized its $21.6 billion purchase of a controlling interest in Sprint Nextel Corp. The rating was cut to Ba1, which is the highest noninvestment grade, from Baa3, according to a Moody’s statement released Thursday. The ratings service made the move around two weeks after a similar downgrade by Standard & Poor’s. The buyer is using the acquisition of Sprint to access American wireless customers, and to help make SoftBank the number one mobile phone operator on the planet. Ironically, Moody’s said that the acquisition “will significantly weaken SoftBank’s financial flexibility.”

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Citigroup (NYSE:C): Current price $52.56

In a memo, Citigroup’s Asia-Pacific Chief Executive Stephen Bird has given his staff an accolade and a thank-you for the bank’s improved second quarter performance, saying, “Thank you for your passion and commitment during the first half. I know I can count on you all to continue this momentum throughout the coming months.” The number three U.S. lender by assets saw revenues in the region move up by 7 percent year-over-year to $4.0 billion, excluding credit- and debt-valuation adjustments, according to the memo. Its markets business, which is the trading of bonds and currencies, posted its second best quarter since 2009.

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Supervalu Inc. (NYSE:SVU): Current price $7.9

The downsized supermarket operator Supervalu has posted a better-than-anticipated adjusted quarterly profit, after it slashed costs and sacked employees, sending its heavily-shorted shares up by over 16 percent on Thursday, and forcing traders who bet against the stock to quickly cover their positions. Joe Bell, senior equity analyst at Schaeffer’s Investment Research, remarked, “This is a very highly shorted stock and it makes sense that after a strong earnings report, these bearish speculators would be rushing to close their positions.”

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