SoftBank Seeks $11bn in Bond Market to Fund OpenAI Investment

SoftBank Group has launched a bond offering worth about $11 billion to help finance its latest investment in artificial intelligence company OpenAI, according to a term sheet released on Monday.

The Japanese technology and investment conglomerate is offering $10 billion in senior unsecured dollar-denominated notes alongside €1 billion, equivalent to about $1.15 billion, in euro-denominated bonds.

The dollar notes are being offered across three maturities of three-and-a-half, five-and-a-half and seven-and-a-half years.

The euro-denominated bonds are structured with four-year and six-year maturities.

If completed at the planned size, the transaction would become the largest Asia-Pacific and Japan non-financial corporate bond deal on record, according to LSEG data.

It would surpass the $10.93 billion bond sale by 7-Eleven Inc. in January 2021.

The planned transaction would also rank among the 20 largest corporate bond deals globally so far this year, based on Dealogic data.

SoftBank is expected to use the proceeds primarily to finance a $10 billion payment related to the third tranche of its follow-on investment in OpenAI.

The investment is expected to close on October 1, according to the term sheet.

The company had previously secured a $10 billion bridge loan facility to finance its OpenAI investment.

The new bond issuance is expected to replace and effectively cancel that bridge financing.

The bonds are expected to be priced on September 24, with settlement scheduled for September 29.

Fitch Ratings has assigned the proposed notes a BB+ rating. The ratings agency said it expects SoftBank’s debt levels to increase as the company funds its committed investments, while noting that the group is expected to maintain adequate liquidity and access to capital markets.

The large-scale fundraising highlights SoftBank’s continued financial commitment to OpenAI and the broader artificial intelligence sector.

SoftBank has been increasing its exposure to AI-related businesses as the technology attracts substantial investment from global companies and financial institutions.

Citigroup is serving as the lead bookrunner for the dollar-denominated notes, while JPMorgan is leading the bookbuilding process for the euro-denominated bonds.

Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley are acting as joint global coordinators for the dollar offering.

JPMorgan, Deutsche Bank and Goldman Sachs are coordinating the euro-denominated issuance.

SoftBank did not comment on the details of the term sheet.

The planned bond sale comes as investors continue to closely monitor SoftBank’s borrowing levels and its ability to finance major technology investments while maintaining sufficient liquidity.

The company’s latest fundraising will therefore be watched closely by credit and capital-market investors as it expands its involvement in the rapidly growing AI industry.

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