SoftBank sells a record junk bond to fund its OpenAI stake

SoftBank Group has issued dollar- and euro-denominated bonds in what Reuters described as the largest high-yield bond sale on record³. Reuters and Channel NewsAsia put the size at $11.1 billion^2,3, and MarketScreener reported the same figure in senior notes to fund the group’s OpenAI investment⁷. The Financial Times reported the raise as $11bn and quoted a market participant saying SoftBank was issuing the biggest bond in high-yield history¹. The Straits Times put the figure at $14.2 billion⁴.

The proceeds have a single destination. Benzinga reported that the sale funds the final $10 billion tranche of SoftBank’s OpenAI investment⁸. TradingView reported that, once completed, SoftBank’s cumulative investment in OpenAI will reach $64.6 billion¹⁰.

The sale was launched on Thursday⁸, with the bonds split between dollar and euro tranches^2,3. MarketScreener also noted Masayoshi Son’s ambition of a $1 trillion AI mega-hub in Arizona⁷.

Why it matters to investors

The AI build-out is now being financed in the riskiest part of the credit market, at a moment when yields are rising. The Japan Times reported SoftBank taking on junk-bond debt at record yields to fund its OpenAI ambitions, and noted that the flood of AI funding has made some bond investors uneasy⁶. Bloomberg reported that SoftBank’s OpenAI debt is getting costlier, riskier and bigger for the investors and lenders bankrolling Son’s bet⁵. Bloomberg framed the financing as a debt-fuelled OpenAI bet that is becoming more expensive for SoftBank⁵.

Concentration is part of the risk. The Straits Times reported that SoftBank makes up 63.4 per cent of the Asia Pacific and Japan high-yield corporate bond market⁴, and the Financial Times noted that Fitch has assigned the group a rating¹.

What to watch

Equity investors were not sure what to make of it. SoftBank shares jumped more than 7% after the bond sale⁹, then gave the gain back¹⁰. The group has separately agreed to a $30 billion investment⁹.

The disagreement over the headline number is itself worth noting: reports on the same deal range from $11bn to $14.2 billion^1,3,4. The variables from here are the cost of the debt, which Bloomberg says is rising⁵, the appetite of high-yield investors described as uneasy⁶, and whether the final OpenAI tranche closes as planned⁸.