SoftBank Group Corp. has launched a substantial bond offering totaling over $11 billion (equivalent to $10 billion in dollar-denominated securities and 1 billion euro, or approximately $1.1 billion, in euro-denominated notes) to fund its investment in OpenAI. This fundraising effort is considered one of the largest high-yield bond deals ever, given SoftBank's BB+ rating from S&P Global Ratings, which places it at the top rung of speculative-grade debt.
The proceeds from these bonds are primarily intended to cover a $10 billion payment for the third tranche of SoftBank's follow-on investment in OpenAI, which is anticipated to close on October 1. A portion of the funds will also be used to pay off a $10 billion bridge loan facility that SoftBank had previously secured for this investment, with any remaining capital allocated for general corporate purposes.
The bond offering is structured across multiple maturities: the dollar-denominated notes are split into 3-1/2-year, 5-1/2-year, and 7-1/2-year tenors, while the euro-denominated bonds are divided into 4-year and 6-year tenors. Citigroup and JPMorgan are serving as lead bookrunners for the notes. The pricing of these bonds is expected to occur on September 24, with settlement following on September 29.
SoftBank's total commitment to OpenAI is nearing $65 billion, making its financial health deeply connected to the AI pioneer's success. This debt-fueled strategy highlights a significant bet on the future of artificial intelligence, at a time when the industry is burning through cash at a historic rate. Bond investors are scrutinizing this deal to assess whether the AI revenue boom will materialize quickly enough to justify such a substantial leverage.
