SoftBank Group has raised $11.1 billion through dollar- and euro-denominated bonds as the Japanese technology investor moves to fund its massive artificial intelligence ambitions, including its planned investment in OpenAI.
The bond sale is the largest high-yield corporate bond offering globally on record, according to Reuters, underlining the scale of SoftBank’s funding requirements as it increases its exposure to AI companies, infrastructure and semiconductor assets.
The proceeds will help finance the final $10 billion tranche of SoftBank’s planned $30 billion investment commitment to OpenAI, the company behind ChatGPT. Once the investment is completed, SoftBank’s total investment in OpenAI is expected to reach $64.6 billion. The next tranche is expected to close on October 1.
SoftBank’s latest fundraising comes as the company is taking a more aggressive approach to financing its AI strategy. Founder and Chief Executive Masayoshi Son has been positioning the group around what he sees as a broad AI ecosystem, with investments spanning large language models, data centres, semiconductors, robotics and other supporting infrastructure.
High cost of borrowing
The new debt comes with relatively high interest rates, reflecting the risk investors associate with SoftBank’s large AI exposure and leverage.
The company issued $1 billion of senior dollar notes with a three-and-a-half-year maturity at an interest rate of 8.625%. It raised another $4.5 billion through five-and-a-half-year notes carrying a 9.25% rate, while a further $4.5 billion was raised through seven-and-a-half-year notes at 9.75%.
SoftBank also issued two euro-denominated tranches worth €500 million each. The four-year notes carry a 7.125% yield, while the six-year bonds offer 8%.
The size and pricing of the transaction have put the spotlight on the financial cost of SoftBank’s AI strategy. The company is effectively borrowing at a premium to secure funds for investments whose future returns depend heavily on the continued growth of the artificial intelligence market.
The bond sale also replaces a $10 billion bridge loan that SoftBank had previously arranged to finance its OpenAI investment. Fitch Ratings has assigned a BB+ rating to the proposed notes and said SoftBank’s debt is expected to rise as it funds its committed investments, while maintaining liquidity and access to capital markets.
AI spending drives corporate borrowing
SoftBank’s fundraising is part of a much larger wave of borrowing linked to the AI boom. Technology companies and investors are raising increasingly large amounts of debt to finance data centres, computing capacity and AI infrastructure as demand for advanced models grows.
The scale of SoftBank’s latest deal highlights how capital-intensive the next phase of AI development is becoming. Building and operating the infrastructure needed for large language models requires substantial spending on chips, data centres, electricity and networking equipment.
SoftBank is attempting to participate across several of these layers rather than focusing on a single AI company. Its strategy includes exposure to semiconductor businesses and data-centre infrastructure alongside investments in AI model developers.
That approach could give the group access to several areas of the expanding AI economy, but it also means that a larger portion of its financial performance is tied to the technology sector.
SoftBank shares gain
SoftBank shares also attracted attention as Japanese technology stocks advanced. The stock rose 5.1% to 6,638 yen on Thursday, according to market data cited by Investing.com, as investors returned to Japanese equities following the autumn holidays.
The share move comes against the backdrop of growing investor interest in SoftBank’s AI strategy and its relationship with OpenAI. The company’s ability to finance its commitments without putting excessive pressure on its balance sheet remains an important issue for investors.
SoftBank has already raised additional money from the domestic market this month. It issued 1 trillion yen, or about $6.32 billion, in corporate bonds aimed at retail investors. The latest international bond issue adds another significant layer of debt financing.
OpenAI at the centre
OpenAI has become central to SoftBank’s latest investment strategy. The planned $30 billion commitment represents one of the company’s biggest individual bets on artificial intelligence.
SoftBank’s financing push comes as OpenAI continues to expand its computing and infrastructure requirements. The growing cost of developing and running advanced AI models has encouraged technology companies and their financial partners to seek new sources of capital.
For SoftBank, the strategy represents a shift from its earlier model of making a wide range of technology investments through its Vision Fund. The company is now concentrating significant financial resources on AI and related infrastructure.
The $11.1 billion bond issue therefore does more than provide funding for a single investment. It demonstrates the scale of capital SoftBank is prepared to deploy behind its AI strategy, while the high borrowing costs show the price of financing that ambition.
As the artificial intelligence industry moves from rapid model development towards large-scale commercial deployment, SoftBank’s balance between investment, debt and returns will remain closely watched by investors.
