Key Takeaways:
SoftBank Group is weighing its largest offshore bond sale in years to refinance the $40 billion bridge loan behind its nearly $65 billion bet on OpenAI.
SoftBank Group is in talks with investment banks to issue $10 billion to $20 billion in dollar- and euro-denominated bonds as soon as September, refinancing part of the $40 billion bridge loan tied to its OpenAI investment, people familiar with the matter said.
"SoftBank is considering various options to refinance the bridge loan, but nothing has been decided," a company spokesperson said.
The offering, which would be SoftBank's second offshore bond sale this year and its largest if it reaches $20 billion, would partially repay the bridge loan secured earlier this year to fund an investment of nearly $65 billion in OpenAI by October. The company is also weighing a Rule 144A offering to broaden access to US institutional investors, Bloomberg reported.
The deal tests investor appetite for junk-rated AI financing at a moment when companies have borrowed more than $410 billion in the bond market for AI infrastructure this year, even as credit risk and return concerns mount.
Refinancing pressure builds ahead of October tranche
SoftBank, founded by Masayoshi Son, has already invested $20 billion in OpenAI and plans a third $10 billion tranche in October, borrowing another $10 billion to support the transaction. The bridge loan matures in March 2027. In April, the company sold about $3.6 billion of dollar- and euro-denominated bonds, including a 10-year dollar tranche carrying an 8.5 percent coupon, whose yield to maturity has since hovered near 8.4 percent.
The potential sale comes alongside a broader refinancing push. On Aug. 6, SoftBank finalized a $10 billion margin loan backed by OpenAI-related assets, and it plans to issue 1 trillion yen ($6.3 billion) in seven-year retail bonds in Japan with a coupon guidance of 4.3 percent to 4.9 percent, expected to be priced in September.
Credit profile under scrutiny
S&P Global Ratings in July revised SoftBank's outlook to "stable" from "negative" while maintaining its BB+ long-term issuer credit rating, which remains below investment grade. The company's financial report for the period ended March showed a cumulative gain of about $45 billion on its OpenAI investment, driven largely by increases in the fair value of equity that are not fully realized.
SoftBank, which holds a roughly 90 percent stake in chip designer Arm Holdings and is set to own about 13 percent of OpenAI by Oct. 1, is essentially an investment holding company. It has said it will use a combination of asset-backed financing and asset sales to repay and refinance the bridge loan, with OpenAI's planned IPO serving as one potential avenue for monetization.
Tokyo-listed SoftBank shares rose 1.49 percent to 5,163 yen on the day, while the US-listed ADR gained 1.71 percent to $16.04. The company's market capitalization stands at about $182.82 billion.
The success of the bond sale will serve as a key barometer for how much debt investors are willing to extend to AI-linked borrowers at a time when the sector's financing needs are accelerating. A strong reception could encourage more AI-themed issuance, while a weak one would signal that credit markets are starting to price in the risk that these multibillion-dollar bets may not deliver the promised returns.
This article is for informational purposes only and does not constitute investment advice.
