Market AnalysisSep 21, 20262 Min
SoftBank To Launch $11 Billion In Bonds To Fund OpenAI Investment
SoftBank Group is set to issue almost $11 billion in bonds to fund its OpenAI investment. The Japanese conglomerate has been ramping up its investments in artificial intelligence, and this bond sale is another endeavour in the same direction.
The term sheet of SoftBank showed that the conglomerate will issue $10 billion of dollar securities across three tenors. It will launch €1 billion-denominated senior unsecured notes, as per Reuters.
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The euro-dominated bonds are split into four-year and six-year tenors. The dollar-denominated securities are split into 3-1/2-year, 5-1/2-year and 7-1/2-year tenors.
Citigroup and JPMorgan are the lead bookrunners of the bonds.
Why Is SoftBank Issuing Bonds?
The issuance will cancel out a $10 billion bridge loan facility that SoftBank secured earlier this year to fund its OpenAI investment.
The proceeds will be used for funding both general corporate purposes as well as the company’s $10 billion payment for the third tranche of its follow-on investment in OpenAI. The tranche is expected to close on October 1.
SoftBank’s deal may be priced on Thursday, September 24, as per a Bloomberg report.
As part of its fundraising measures, SoftBank has sold about $15 billion in notes across currencies. It is the biggest junk-rated borrower in bond markets so far this year, according to Bloomberg-compiled data.
If the company sells about $11 billion in debt, the transaction would be seen as one of the largest junk bond sales ever by a single business, discounting distressed debt exchanges.
S&P Global Ratings has graded SoftBank as BB+, the firm’s highest speculative-grade rating.
On the other hand, Google’s parent company, Alphabet, and Amazon.com, the two biggest sellers of corporate bonds in 2026, are rated AA+ and AA, respectively.
SoftBank’s Ties With OpenAI
SoftBank’s fortunes have become increasingly linked to its ability to monetise its OpenAI holding. Masayoshi Son’s firm has committed almost $65 billion to OpenAI, at a time when safety concerns about the ChatGPT maker and other AI firms are taking centre stage.
SoftBank used a $40 billion bridge loan in March to fund more investment in OpenAI. The company repaid the outstanding balance of $25.9 billion on that facility recently.
The Masayoshi Son-led firm closed out last week with potential fresh borrowings of $21 billion as it seeks deals to increase its AI financing capacity.
The firm has secured an additional $450 million to an existing credit line, increasing the total to $6.5 billion. SoftBank also increased a margin loan backed by shares of Arm Holdings, its chip unit, by $5 billion.
Son has also secured a loan of $11.87 billion to support its OpenAI investment. Apollo Global Management is also in negotiations to boost a loan to SoftBank by $3.6 billion to $9 billion to help finance its investments in the ChatGPT maker.
SoftBank’s deals come as borrowing costs have increased across markets. The yield on the company’s dollar bond maturing in 2031 jumped from 6.7% to 8.2% earlier this year.
Recent calls by the bosses of some of the world’s biggest AI platforms, including OpenAI, to slow AI advances on safety concerns, have led to an increase in the insurance cost of SoftBank’s debt against default, reaching the highest in three years.
OpenAI’s statement about delaying its public issue to 2027 may increase the liquidity of SoftBank’s investments.
With AI companies standing at a threshold related to the pace of development, SoftBank’s bet to go all in on OpenAI will be of great interest to investors.
