SoftBank Junk bonds will soon be the focus of attention as SoftBank Group Corp. is about to sell high-yield bonds in an issuance of more than $11 billion for a follow-on investment in OpenAI.
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According to Bloomberg, as part of its junk bond issuance, SoftBank plans to issue bonds totaling $10 billion in dollar denominations across three different maturities, as well as €1 billion of bonds, equivalent to $1.1 billion, with two different maturities in euros.
This large-scale funding initiative is a demonstration of the extent to which SoftBank is depending on debt capital markets due to the increasing involvement of Masayoshi Son in making artificial intelligence the future of SoftBank’s investments. So far, SoftBank has allocated $65 billion to OpenAI.
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SoftBank Junk Bonds Support Growing OpenAI Investment
This particular SoftBank junk bond issue is part of an enormous attempt to finance the firm’s AI ventures.
The Japanese conglomerate had arranged a $40 billion bridge loan in March in order to finance its venture into OpenAI. SoftBank is now down to only $25.9 billion left of this financing deal but continues looking for other financing sources.
Also, the firm has created even more capacity for borrowing via certain deals. Bloomberg reports that SoftBank closed the last week with nearly $21 billion in new borrowing capacity.
The first was the addition of $5 billion to the margin loan secured against Arm Holdings Plc’s shares. The loan is currently worth $25 billion, providing yet another avenue through which SoftBank can raise money.
SoftBank Expands $6.5 Billion Credit Facility
It has also raised its existing credit facility by $450 million, bringing the total to $6.5 billion. The existing $6.05 billion credit facility would expire this month. The new contract has extended the facility for one year, giving SoftBank extra financial room as it keeps making investments in artificial intelligence.
Over 20 banks were involved in the credit facility, while the new contract is charged at a rate that is 210 basis points above its benchmark.
The extra financing capacity results from the fact that SoftBank is managing several large investments at once, especially in OpenAI.
SoftBank Junk Bonds Become Major Debt-Market Story
The significance of the size of the planned SoftBank junk bonds offering is that the firm has been a major issuer of speculative-grade debt already this year.
According to Bloomberg data, SoftBank has sold more than $14 billion worth of multi-currency notes for 2026 and therefore has been the largest junk-rated borrower this year.
Also, a loan worth $10 billion is available to the firm as a result of the direct backing by OpenAI stock. By securing the loan through the use of the investment, SoftBank can raise money in addition to advancing its AI investment approach. The proposed bond issue will further the level of indebtedness in the capital structure.
Rising Borrowing Costs Increase Financing Pressure
This surge in SoftBank’s debt is happening amidst a rise in the cost of borrowing in the international financial system.
According to Bloomberg, the yield for SoftBank’s debt in dollars maturing in 2031 had hit 8.2% in the first few days of April, up from 6.7% in January.
High returns can increase the cost of new borrowings, especially for firms that are rated junk in terms of their credit profile. This means the valuation of SoftBank junk bonds is critical in understanding the mounting debt burden of the firm. The problem at SoftBank will be balancing high borrowing costs against its future vision of AI.
SoftBank Deepens Its AI Financing Strategy
SoftBank’s recent debt plans indicate the extent to which capital is being devoted to the AI industry. SoftBank has increased its involvement with OpenAI, in addition to retaining its huge investments in Arm and other technology firms.
The intended SoftBank junk bond issuance would add another huge chunk of capital for SoftBank’s investment strategy. Nevertheless, securing billions of dollars via debt adds to the financial obligations of the company.
SoftBank’s increasing reliance on bonds, margin lending, and credit arrangements is a direct response to the vast amounts of money that it needs for its AI endeavors.
With the OpenAI investment expected to be finalized in the coming month, the newly issued bond offering could be just one of the many steps that SoftBank is taking to acquire funds for its AI portfolio.
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