Multi-Sector Holdings

Credit default swaps (CDS) indicating the credit risk of SoftBank Group are hovering near their highest level in three years. According to data provider CMA, the mid-spread on five-year CDS stood at 383.2 basis points on the 16th, near its highest level since 2023. Portfolio company OpenAI in the U.S. is expected to forgo an initial public offering within the year, leaving uncertainty over when SoftBank Group will recover its investment. Meanwhile, SoftBank Group has secured $11.9 billion, or 1.85 trillion yen, in financing to fund its investment in OpenAI, exceeding its initial target, showing progress on the funding front. Sharon Chen, a credit analyst at Bloomberg Intelligence, noted in a report dated the 16th that funding costs are rising along with higher government bond yields in Japan and the U.S., and said SoftBank Group's overseas bonds are seeing wider spreads amid concerns over increased supply and growing exposure to OpenAI. The company recently issued 1 trillion yen in retail bonds in Japan and is also preparing an overseas bond issuance, and if CDS remain at high levels, it could affect future issuance terms.

Wall Street traded lower on Monday as AI-related shares tumbled after executives at leading U.S. AI companies called for a slower pace of development, with SoftBank falling as much as 13.2% in Japan, SK Hynix dropping 6.4%, Samsung Electronics declining 4%, and in the U.S. Nvidia slipping 2.4% premarket while Micron and AMD each fell 5% and Broadcom dropped 3.4%, following an essay Saturday by Anthropic CEO Dario Amodei arguing that progress on improving AI model capabilities should be slowed. Crude oil surged, with front-month Nymex crude jumping 4.3% to $104.37/bbl and Brent rising 4.5% to $109.32/bbl, after Persian Gulf countries called off a planned meeting with Iran on reopening the Strait of Hormuz and a Friday drone strike knocked out Saudi Arabia's East-West pipeline, which feeds the Red Sea port of Yanbu and moves 4M bbl/day; traders estimate the closure could cut off up to 4% of global oil supply, with Yanbu storage covering just 5-7 days of exports. The benchmark 10-Year Treasury yield reached 5% for the first time since October 23, 2023, adding 3 basis points Monday, while the 2-Year yield rose 4 basis points to about 4.66% and the 30-Year added 2 basis points to 5.37%. Kimberly-Clark is preparing possible asset sales to resolve European Union competition concerns over its proposed $40 billion acquisition of Kenvue, with the European Commission expected to notify the company of its concerns this week ahead of a preliminary review deadline on September 29.

SoftBank secured an $11.87 billion two-year loan to support its investment in U.S. artificial intelligence firm OpenAI, according to people familiar with the matter cited by Bloomberg. The facility, finalized last week, drew commitments from about 20 banks and exceeded SoftBank's earlier $10 billion target. The loan adds to SoftBank's financing tied to its OpenAI bet: the company has also secured a $10 billion margin loan backed by its OpenAI stake and is considering a U.S. dollar bond sale of as much as $20 billion. SoftBank shares slipped almost 13% on Monday as growing concerns over AI safety weighed on the Japanese investment giant, with Anthropic CEO Dario Amodei calling for a slower pace of AI development and OpenAI CEO Sam Altman saying they would not proceed with a public offering this year as they address safety-related concerns. SoftBank, led by billionaire Masayoshi Son, plans to invest nearly $65 billion in OpenAI by October and has already raised about $37 billion this year, and said last week it would repay $25.9 billion of the outstanding balance on a $40 billion loan obtained earlier this year to finance its OpenAI investment, with the repayment due September 15 against an original maturity of March next year.

Shares of Japanese investment conglomerate SoftBank Group, a key investor in OpenAI, fell more than 10% on Monday after Anthropic and OpenAI called for slowing AI development for safety, dragging Asian markets to a mixed close. SoftBank stock traded in Japan plummeted 11.2% after OpenAI CEO Sam Altman backed Anthropic CEO Dario Amodei's weekend calls for the AI industry to slow down, and Altman told Fortune on Saturday that OpenAI would not hold its initial public offering this year as it focuses on safety. Other AI-related Asian stocks also fell, with South Korea's SK Hynix down 5.3%, Samsung Electronics off 2.8%, Japan's Tokyo Electron down 0.9% and Kioxia Holdings sinking 6%. South Korea's Kospi lost 2.5% to 6,739.68, Japan's Nikkei 225 slid 0.8% to 63,474.58, Hong Kong's Hang Seng rose 0.3% to 24,886.81 and the Shanghai Composite climbed 0.2% to 3,894.28. Oil prices gained more than 3% after Saudi Arabia shut a major pipeline used to bypass the Strait of Hormuz following an attack, with Brent crude up 3.2% to $107.94 a barrel and benchmark U.S. crude up 3.2% to $103.26 a barrel.

SoftBank Group shares fell more than 13% in Monday morning trading in Tokyo, the steepest drop in nearly three months, after senior executives at OpenAI and Anthropic urged developers to slow the development of advanced AI to prioritise safety, fuelling concern over SoftBank's big bet on AI technology. SoftBank is one of OpenAI's largest backers and plans to raise its cumulative investment in the ChatGPT developer to nearly 65 billion dollars by October. The company also plans to issue retail investor bonds worth 1 trillion yen, or about 6.5 billion dollars, and is preparing to borrow another 10 billion dollars linked to OpenAI shares to support various deals, including the acquisitions of ABB Robotics and DigitalBridge, as well as plans to build data centres in several countries around the world. Yugo Tsuboi, chief strategist at Daiwa Securities, said the market is worried that OpenAI's valuation may not be as high as previously expected, and investors are watching the situation closely because it is still unclear how much AI development will slow. SoftBank shares are down about 30% from their June peak after reports that OpenAI's planned initial public offering may be delayed. Dario Amodei, chief executive of Anthropic, said that slowing the development of frontier AI capabilities does not mean that industry spending or growth will slow along with it.

SoftBank Group has set the interest rate on its retail investor bonds worth 1 trillion yen, or approximately 6.3 billion dollars, at 4.75% for 7-year bonds, amid rising interest rates in Japan, which has increased the attractiveness of investing in debt securities and may encourage more Japanese companies to raise funds from retail investors. The interest rate is at the relatively high end of the 4.3-4.9% range that SoftBank announced in August, and is significantly higher than the average yield of about 2.3% for yen-denominated corporate bonds issued to retail investors in Japan this year. This bond issuance comes at a time when the yield on 10-year Japanese government bonds has surged above 3% for the first time in about 30 years, making debt securities more appealing to Japanese households. Kazuma Ogino, a senior credit analyst at Nomura Securities, believes that both the yield level and the large issuance size of 1 trillion yen could attract new retail investors to the market. Japan's retail bond market is expanding rapidly, with the value of yen-denominated corporate bonds issued to retail investors from the start of the year to September 4 reaching 2.88 trillion yen, including SoftBank's 1 trillion yen deal, and surpassing the total issuance for any full year in the past. This growth comes as Japanese companies have increased capital needs for mergers and acquisitions and growth investments. Ogino noted that turning to retail investors helps diversify funding sources and reduces pressure on credit spreads. This trend could benefit both companies seeking additional funding channels and retail investors looking for higher returns, while helping to expand Japan's retail bond market as the country enters a higher interest rate environment.

The Fair Trade Commission has been proceeding with steps to issue a recommendation to Japan Post for violating the Freelance Law, it was learned on the 27th. For individual business owners who were commissioned for work such as training instructors, the commission is expected to find that Japan Post failed to specify conditions such as payment deadlines in advance and delayed payments. According to sources, since November 2024, Japan Post commissioned work to over a hundred individual business owners without specifying transaction conditions in writing beforehand. Under the Freelance Law, if payment deadlines are not specified, payment must be made on the date of work completion, but Japan Post paid after the completion date except for some cases. According to Japan Post, an internal survey conducted from September to October last year found at least 380 transactions at the head office and branch offices that could violate the law, related to commissioned work such as employee training instructors, experts, and flyer printing. The company acknowledged that its internal rules were inadequate and that awareness was insufficient, and revised the rules in February this year. The company admitted to being under investigation and commented, "There were cases where we did not specify transaction conditions in advance. We will thoroughly communicate the revised rules."

SoftBank Group is preparing to issue approximately 1 trillion yen, or $6.26 billion, in seven-year corporate bonds targeting Japanese retail investors, which would be the largest such sale ever by a Japanese company. The offering comes as Nvidia's 5-year credit default swap spread climbed to 80.77 basis points as of August 19, surpassing its late-July peak and rising roughly 90% year-to-date. Long-term government yields in the U.S., Germany, and Japan have reached their highest levels in decades, with investors citing hyperscaler bond supply as a contributing factor. AI infrastructure debt now accounts for as much as 30% of net new issuance in some investment-grade indexes this year, according to private credit market commentary cited by Reuters. Japan's broader retail-targeted corporate bond market is on pace to hit a record 2.8 trillion yen this year, per Nikkei, but SoftBank's offering would dwarf anything attempted before. Oracle offers the starkest credit warning in the sector, with its 5-year CDS spread surpassing 200 basis points in July 2026, approximately four times the investment-grade corporate index and a level not seen since the 2008 financial crisis.