SoftBank raising US$11.1 billion in world’s biggest high-yield corporate bond sale

[TOKYO] Tech investor SoftBank Group is issuing US$11.1 billion in dollar- and euro-denominated bonds, set to be the largest high-yield corporate bond sale globally on record as it seeks to fund its mammoth bet on OpenAI.

The funding follows a one trillion yen (US$6.3 billion) bond issue aimed at retail investors this month, and is likely to prompt further scrutiny of SoftBank’s finances, which could become vulnerable should market sentiment towards OpenAI and the artificial intelligence sector weaken significantly.

Under the leadership of Masayoshi Son, known for bold bets throughout his long career and now keen to make the Japanese conglomerate the dominant investor in AI, SoftBank has committed US$64.6 billion to ⁠OpenAI, of which it will own roughly 13 per cent by next week.

It is also acquiring ABB’s robotics business for US$5.4 billion and DigitalBridge for US$3.1 billion.

The sheer size of its AI-related investments and the amount of money it has sought to fund them has led to higher yields to pay for SoftBank, which has long been a junk-bond issuer, as well as jumps in the cost of insuring its debt against default.

That said, the issuance is expected to go smoothly.

“I was positively surprised by the market appetite,” said Satoru Aoyama, senior director at Fitch Ratings. “Hyperscalers in the US have been raising debt but they have high credit ratings. Now AI-driven debt issuance has reached the high-yield market at scale,” Aoyama added.

SoftBank is issuing dollar-denominated senior notes of US$1 billion at a 3-1/2-year term, US$4.5 billion at 5-1/2 years and US$4.5 billion at 7-1/2 years, a filing showed. The bonds pay interest rates of 8.625 per cent, 9.25 per cent and 9.75 per cent respectively.

It also issued two 500 million euros (US$570 million) tranches of euro-denominated senior notes with terms of four and six years, yielding 7.125 per cent and 8 per cent.

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By comparison, a US$7.3 billion SoftBank issuance in June 2021 of senior dollar- and euro-denominated bonds yielded between 2.125 per cent and 5.25 per cent.

A successful sale would mark the largest high-yield corporate bond issuance globally to date, surpassing French telecoms firm Numericable Group’s US$10.9 billion issuance in 2014, LSEG data showed.

SoftBank has issued US$14.6 billion in high-yield bonds so far in 2026, making up 63.4 per cent of the Asia Pacific and Japan high-yield corporate bond market.

It has also sold off assets and taken out loans backed by its holdings in chip designer Arm and OpenAI to fund its commitments.

SoftBank’s hopes for an influx of cash through the public listings of OpenAI and data centre development subsidiary SB Energy were dented in recent weeks as both delayed initial public offering plans that were set to launch as early as this month.

“Risks for SoftBank credit are material and have increased as concentration has increased and cash flow has come under material strain,” CreditSights’ head of telecom and media Mark Chapman wrote in a note.

SoftBank’s holdings in Arm and OpenAI make up three-quarters of the group’s asset value at current levels, he calculated.

The cost of insuring SoftBank’s debt against default has shot up, with the five-year credit default swap spread exceeding 400 basis points this week, compared with around 280 basis points in June.

However, S&P Global Ratings’ Makiko Yoshimura wrote in a note that Arm’s strong share price performance has supported SoftBank’s credit quality such that the delay to OpenAI’s IPO does not have an immediate negative impact on SoftBank’s creditworthiness.

CreditSights’ Chapman sees the potential for a ratings upgrade in the intermediate term if OpenAI’s IPO is “timely and successful”. REUTERS