SoftBank Group to Issue About $369 Million in Bonds, Masayoshi Son Increases AI Investment

TradingKey - During Asian trading hours on July 17, Japanese media reported that SoftBank Group plans to issue approximately 60 billion yen (about $369 million) in bonds to Japanese institutional investors this month to raise funds for AI-related investments.

According to information disclosed by the lead underwriter, Daiwa Securities, SoftBank will issue approximately 50 billion yen in 3-year bonds and about 10 billion yen in 5-year bonds during the week of July 27.

This is not the first time SoftBank has raised funds through bond issuance this year. So far this year, SoftBank has raised 678 billion yen (equivalent to $4.18 billion) by issuing subordinated bonds to retail investors and entered the US and European bond markets in April. Analysis suggests that this new bond issuance further highlights SoftBank's growing funding needs amid its continuous expansion in the AI sector.

SoftBank's massive investment in OpenAI continues to progress. In February this year, SoftBank announced an additional $30 billion investment in OpenAI in three tranches, with $10 billion to be deployed in April, July, and October respectively. SoftBank previously confirmed that the first tranche in April has been fully executed. On July 1, SoftBank completed the second $10 billion injection through Vision Fund 2. Once the third tranche is completed in October, SoftBank's cumulative investment in OpenAI will reach $64.6 billion, with an ownership stake of approximately 13%.

However, SoftBank's fundraising through other channels has not been entirely smooth sailing. According to previous reports, SoftBank initially planned to apply for a margin loan of at least $10 billion backed by its holdings in OpenAI, but the plan was temporarily shelved as banks remained cautious about the valuation of private equity. SoftBank subsequently lowered its target size to about $6 billion. By July, SoftBank again restarted talks with a syndicate of banks consisting of Goldman Sachs ( GS ), JPMorgan Chase ( JPM ), and Mizuho Financial Group, seeking to secure a $10 billion loan again and proactively offering repayment guarantees to ease lenders' concerns.

S&P Global Ratings on July 16 revised SoftBank's rating outlook to "stable" from "negative" while affirming its "BB+" long-term issuer credit rating. S&P stated that as its chip design subsidiary Arm ( ARM )'s stock price has surged, the improvement in SoftBank's financial health has exceeded previous expectations.

However, recent market concerns over investment returns on AI have intensified, dragging down the performance of semiconductor-related stocks. On July 17, SoftBank's stock price tumbled by over 9%. Additionally, earlier reports that OpenAI might postpone its IPO to 2027 to seek a higher valuation also weighed on market sentiment.

[Source: Futu]