SoftBank Raises $11 Billion in Junk Bonds to Fund AI Push
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SoftBank Group raised roughly $11 billion in multi-currency high-yield bonds across Tokyo and overseas markets this week to fund its accelerating artificial intelligence investments.
The debt package makes the Japanese conglomerate the largest corporate junk-bond borrower in the world.
Tranches in dollars and euros were priced at historic borrowing costs for the group. The dollar portion totaled $10 billion across three tenors. It included $1 billion in 3.5-year notes yielding 8.625 percent, $4.5 billion in 5.5-year paper yielding 9.25 percent, and $4.5 billion in 7.5-year securities yielding 9.75 percent. The firm also sold 1 billion euros ($1.14 billion) across four-year and six-year notes. The longer euro tranche landed at an 8 percent yield.
Yields Climb to Decade Highs
Borrowing costs topped anything founder Masayoshi Son has paid on dollar debt. Pricing landed on a day when benchmark US Treasury yields reached two-decade highs. That pushed coupon expectations up across global credit desks.
Strong institutional appetite still allowed the company to trim pricing from its opening guidance. Aggregate orders for the dollar bonds reached more than $30 billion by late afternoon in Asian trading. That demand gave underwriters room to compress yields before final allocation.
Credit markets nonetheless demanded a sharp premium for the company’s heavy balance sheet exposure. The five-year credit default swap spread on SoftBank debt widened this month to its highest level since early 2025.
“Proceeds will finance investment commitments nearing $65 billion to ChatGPT maker OpenAI alongside related computing and infrastructure acquisitions.”
The Scale of the AI Push
Proceeds will finance investment commitments nearing $65 billion to ChatGPT maker OpenAI alongside related computing and infrastructure acquisitions. Son is assembling software, data centre, and chip assets. His goal is an integrated artificial intelligence ecosystem across global markets.
Goldman Sachs credit strategists calculate that global AI-linked corporate debt issuance has surpassed $575 billion in 2026. Rapid accumulation of balance sheet use across technology conglomerates raises exposure for bondholders if enterprise monetization lags behind infrastructure spending.
Institutional debt investors in Asia and the West are now pricing direct equity-style operational risks into corporate paper. For suppliers and digital platform operators across Asia, SoftBank’s aggressive funding confirms that capital spending on computing capacity will remain concentrated. Only a small cluster of mega-cap players can pay such punitive interest rates.
Earlier Bets and Balance Sheet Pressure
This debt sale follows a string of escalating capital outlays by the Tokyo-based investment house. In April 2025, SoftBank revealed an initial $30 billion capital commitment to OpenAI. That deal triggered a sharp expansion in the cost of insuring its underlying credit.
Son has rejected suggestions that the pace of debt-fueled capital expenditure creates systemic risk for the group. He stated earlier this year that artificial intelligence sectors will generate 20 percent of worldwide gross domestic product by 2040. That represents an estimated $46 trillion in economic output.
Market scrutiny now shifts to the coupon schedule of the new debt package, which adds roughly $1 billion in annual interest charges to group cash flow. Investors are watching SoftBank’s next quarterly earnings filing for detail on portfolio asset sales required to service the debt load before the 3.5-year dollar tranche matures.
Questions & Answers
Q.How much of the new junk bond issuance was in dollars and euros, and what were the longest tenors for each currency?
How much of the new junk bond issuance was in dollars and euros, and what were the longest tenors for each currency?
The dollar portion totalled $10 billion, with the longest tenor at 7.5 years. The firm also sold 1 billion euros, with the longest tranche at six years.
Q.What specifically caused coupon expectations to rise for SoftBank's new bond issue?
What specifically caused coupon expectations to rise for SoftBank's new bond issue?
Benchmark US Treasury yields reached two-decade highs on the day the bonds were priced. This event pushed up coupon expectations across global credit desks, impacting SoftBank's borrowing costs.
Q.What is the primary purpose of the funds raised through this debt package?
What is the primary purpose of the funds raised through this debt package?
The proceeds will fund investment commitments nearing $65 billion to ChatGPT maker OpenAI. This also includes related computing and infrastructure acquisitions to build an integrated AI ecosystem.
Q.What impact will the new debt package have on SoftBank's annual interest charges?
What impact will the new debt package have on SoftBank's annual interest charges?
The new debt package will add approximately $1 billion in annual interest charges to SoftBank's group cash flow. Investors are now scrutinising how these costs will be serviced.