SoftBank Plans Up To $20 Bn Bond Sale To Refinance OpenAI Investment

SoftBank Group is weighing a bond sale of as much as $20 billion to help refinance borrowings linked to its investment in OpenAI, as per a report by Bloomberg (BBG).

The Japanese conglomerate is discussing a potential offering of $10 billion to $20 billion with investment banks.

The bonds could be issued in dollars and euros as early as September, although the size, timing and structure of the transaction remain undecided, the report said.

Part of the proceeds could be used to repay a $40 billion bridge loan secured earlier this year to finance SoftBank's investment in OpenAI, it added.

The remaining funds may support other artificial intelligence investments.

"We are considering various options to refinance the bridge loan, but nothing has been decided, including the amount for each," a SoftBank spokesperson said, as per BBG.

SoftBank is expected to invest nearly $65 billion in OpenAI by October, with loans forming part of the financing, as per BBG.

The proposed fundraising comes as companies across the technology sector increase borrowing to finance AI infrastructure and related investments.

Companies have raised more than $410 billion through bond markets this year for data centres and other AI projects, the BBG report said.

SoftBank's debt came under pressure following the news report. Its 8.5% dollar bond dropped 2.3 cents to about 98 cents, putting it on course for its sharpest one-day decline since its April pricing, it said.

The cost of insuring SoftBank's debt against default also increased, with credit-default swaps widening 10.7 basis points, it added.

Bond Structure Under Consideration

SoftBank sold $3.6 billion of dollar- and euro-denominated bonds in April, including a 10-year dollar tranche with an 8.5% coupon.

According to the report, SoftBank is considering a 144A format, which would allow the notes to be offered to institutional investors in the US.

It would be the company's first use of the structure in more than a decade and could broaden its investor base.

Bloomberg Intelligence credit analyst Sharon Chen said a bond sale of this size could significantly reduce SoftBank's funding gap, which may exceed $20 billion, although the company would likely have to offer higher borrowing costs.

If SoftBank’s bond offering hits the upper end of the target range, it would be the largest such deal from any Asian firm this year, the BBG report said.

The company is also preparing a record ¥1 trillion ($6.3 billion) retail bond sale in Japan and recently secured a $10 billion margin loan backed by its OpenAI stake.