Japanese investment firm SoftBank Group has launched a bond sale of approximately $11 billion to refinance short-term loans linked to OpenAI.
The debt placement comprises $10 billion in U.S. dollar-denominated bonds across five tranches with maturities ranging from 3.5 to 7.5 years, alongside €1 billion in eurobonds split into four-year and six-year maturities, according to reports from news agencies Reuters and Bloomberg.
Final pricing for the bond issue is expected on September 24, with final settlement scheduled for September 29. SoftBank intends to use the capital to replace existing short-term bank financing rather than increase its net funding commitments to OpenAI.
Refinancing the OpenAI investment
In February, SoftBank committed to invest $30 billion in OpenAI at a pre-money valuation of $730 billion for the creator of ChatGPT. Under the terms of that agreement, payments were structured in three equal installments due on April 1, July 1, and October 1. SoftBank initially drew on short-term bridge loans to fulfill those installments, with plans to replace the temporary borrowing with proceeds from asset sales and debt instruments over time.
SoftBank Group, a Tokyo-headquartered multinational holding company founded by executive Masayoshi Son, is renowned for its technology investment funds. OpenAI, headquartered in San Francisco, California, develops advanced artificial intelligence technologies. SoftBank has invested a cumulative total of $64.6 billion in OpenAI, securing an equity stake of approximately 13 percent in the company.
Asset sales and debt management
The decision to issue long-term bonds comes as financial pressure on SoftBank remains elevated following extensive dealmaking. On September 9, the group reported that it had completed an early repayment of $25.9 billion out of a $30 billion drawdown from its $40 billion credit line, leaving approximately $4.1 billion outstanding.
To finance its growing portfolio of investments, SoftBank expanded a separate credit facility to $6.5 billion, sold its entire holding in American chipmaker Nvidia for $5.8 billion, and divested $9.2 billion in T-Mobile US shares. The conglomerate also pledged shares in British semiconductor design firm Arm as security for a $25 billion margin loan.
Borrowing costs and valuation outlook
The crucial metric for the new debt issue will be the final cost of borrowing for the group. In April, SoftBank issued dollar-denominated bonds carrying yields of 7.625 percent for 3.5-year notes and 8.25 percent for 5.5-year notes. Yields on its dollar bonds maturing in 2031 reached approximately 8.2 percent in September.
Looking ahead, OpenAI is currently holding negotiations regarding a new private financing round that would value the artificial intelligence company at a significantly higher valuation.
