SoftBank sells nearly $11 billion in bonds to finance OpenAI
SoftBank Group on Monday initiated the issuance of $10 billion in dollar-denominated senior unsecured notes and €1 billion in euro-denominated notes to finance its investment in OpenAI, the organization responsible for ChatGPT, as reported by source, referencing a term sheet. According to the report, the proceeds will finance SoftBank’s $10 billion payment for the third tranche of its follow-on investment in OpenAI, anticipated to close on October 1. The remaining proceeds will be allocated for general corporate purposes, as stated in the term sheet. Earlier in the day, Source reported that the Japanese conglomerate was seeking over $11 billion through a junk bond sale to finance its expanding investment in OpenAI. The dollar-denominated notes are categorised into maturities of 3.5 years, 5.5 years, and 7.5 years, whereas the euro-denominated notes feature maturities of 4 years and 6 years. The issuance is anticipated to price on September 24 and settle on September 29, as indicated in the term sheet. The new bonds will also cancel a $10 billion bridge loan facility that SoftBank had earlier secured to fund its OpenAI investment, according to the term sheet.
The bond sale has a total face value of $10 billion and €1 billion, equivalent to more than $11 billion. Source reported that a transaction of this magnitude would be classified among the largest junk bond issuances by a single entity, excluding distressed debt exchanges. SoftBank has pledged nearly $65 billion to OpenAI and has been accumulating debt to support its expanding investments in artificial intelligence. In March, the company secured a $40 billion bridge loan to facilitate a further investment in OpenAI. It has subsequently settled the remaining $25.9 billion on that facility, as reported by source. SoftBank has also augmented its other borrowing facilities. It raised a margin loan backed by shares of chip designer Arm Holdings by $5 billion to $25 billion and secured an additional $450 million on an existing credit line, increasing that facility to $6.5 billion, according to source. Apollo Global Management is also in discussions to augment a loan to SoftBank by $3.6 billion, raising the total to $9 billion, to facilitate its investment in OpenAI. SoftBank has obtained a loan amounting to $11.87 billion for the same purpose, according to sources familiar with the transactions, as reported by source.
Together, these transactions represent approximately $20.92 billion in both committed and potential new debt aimed at financing SoftBank’s expansion into AI, which includes its investment in OpenAI, as reported by source. SoftBank has issued nearly $15 billion in bonds across various currencies in 2026, establishing itself as the largest corporate borrower with a junk rating in the bond markets to date this year, as per data gathered by source. It also secured a $10 billion loan earlier this year backed by its stake in OpenAI. The planned bond sale occurs amid SoftBank’s increasing borrowing costs. The yield on its dollar bond maturing in 2031 increased to 8.2 per cent earlier this month, up from a low of 6.7 per cent in January. Data cited by source indicated that spreads have expanded in conjunction with rising underlying US Treasury yields. The cost of insuring SoftBank’s debt against default has reached its highest level in three years, as reported by source. SoftBank has increased its borrowing against Arm shares for the third occasion as it pursues financing for its AI investments. The margin loan commenced as a $8.5 billion facility in 2023.
It was raised to $13.5 billion in 2024 and subsequently to $20 billion the following year. This month, SoftBank renegotiated the terms and increased the facility to $25 billion, according to a report from source. As of May, the facility was backed by 769 million Arm shares, which constitutes a 72 percent ownership in the chip designer, as indicated in company filings. SoftBank possesses nearly 90 percent of Arm. The company had drawn $20 billion from the facility as of December. The loan is set to mature in September 2027. Demand from lenders for the expanded facility reached approximately $7 billion, surpassing SoftBank’s initial plan to secure between $3 billion and $5 billion, according to sources. Arm’s share price has increased by 142 percent this year, as reported by source. SoftBank refrained from providing any commentary regarding the rise in the Arm-backed margin loan and the broadened credit line. SoftBank’s exposure to OpenAI has heightened the significance of the value and liquidity of its investment in the company. OpenAI Chief Executive Officer Sam Altman has stated that the company will refrain from pursuing an initial public offering this year. Investors have been closely monitoring the decision, as a public listing would enhance liquidity for SoftBank’s investment, according to source.
SoftBank announced that it had been engaging with fixed-income investors in New York; however, it has yet to reach a decision regarding a bond issuance. “We have investor meetings to provide an update in New York on a non-deal basis. Nothing has been determined on bond issuance,” the company said. SoftBank’s financing needs encompass more than just its investment in OpenAI. The company has also acquired ABB’s industrial robotics business for $5.4 billion and data centre-focused private equity firm DigitalBridge Group for approximately $3 billion in cash. It is substituting certain short-term borrowing with debt that has a longer maturity profile. SoftBank also secured a $10 billion two-year loan last month, utilising its OpenAI stake as collateral, with Apollo participating as one of the lenders. The group’s AI plans encompass the development of data centers in the United States and France. SB Energy, the US unit, is in the process of developing 8.8 gigawatts of data center capacity throughout the United States, with an estimated capital expenditure of $174 billion required for this initiative. SoftBank has also announced plans for a 5-gigawatt data center in France.
