SoftBank mulls up to $20 billion bond sale for OpenAI financing

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SynopsisSoftBank Group is in talks with investment banks about a potential $10 billion to $20 billion bond offering to help refinance a loan for its investment in US tech giant OpenAI. However, the talks are still ongoing and details could change.

APMasayoshi Son, left, chairman and CEO of SoftBank Group and Mark Chen, chief research officer for OpenAISoftBank Group Corp. is talking with investment banks about a potential $10 billion to $20 billion bond offering to help refinance a loan for its investment in US tech giant OpenAI, according to people familiar with the matter.

The offering could be denominated in dollars and euros and could come as early as September, said the people, who asked not to be identified discussing private matters. The talks are still ongoing and details could change, the people added.

Proceeds from the sale would partly be used to repay a $40 billion bridge loan secured earlier this year for its OpenAI investment, the people said. Junk-rated SoftBank, founded and led by billionaire Masayoshi Son, is slated to invest close to $65 billion in OpenAI by October, funded in part by loans.

The bond sale would add to a slew of fundraising by companies looking to deepen their reach into artificial intelligence, despite concerns about growing credit risks and whether these investments will actually pay off. Some firms are turning to junk bond investors for AI-related funding, even for debt that is investment-grade, as competition for capital heats up.

US tech firms, meanwhile, are planning to pour trillions of dollars into data centers and other AI infrastructure in the coming years. Companies have already borrowed more than $410 billion so far this year for such facilities and other AI investments in the bond markets alone, according to data compiled by Bloomberg News.

“We are considering various options to refinance the bridge loan, but nothing has been decided, including the amount for each,” a SoftBank spokesperson said in an emailed response to a request for comment.

Unlike most of its international offerings, SoftBank is exploring a 144A format for the first time in more than a decade, which would allow the notes to be sold to institutional investors in the US, the people said. That would help the company tap a larger pool of capital and potentially boost demand for the sale, they added.

If SoftBank’s bond offering hits the upper end of the target range, it would be the largest such deal from any Asian firm this year, according to data compiled by Bloomberg. It would also mark the Japanese conglomerate’s second foray into the offshore bond market this year.

The firm sold a combined $3.6 billion of bonds in dollar and euros in April, including a 10-year dollar tranche that carried a record 8.5% coupon. The yields on the dollar notes were around the same level in Wednesday morning trading.

SoftBank is separately looking to raise funds in its home market, with a record ¥1 trillion ($6.3 billion) retail bond sale in Japan planned for early next month. It also just secured a $10 billion margin loan backed by its OpenAI stake, which includes covenants that may require it to post cash or repay early.

Read more news onSoftBank bond saleOpenAI financing$20 billion bond offeringMasayoshi SonAI investments

(Catch all the Technology News News, and Latest News Updates on The Economic Times.)

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