SoftBank eyes over $11 billion junk bond issuance to fund OpenAI investment

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Summary · why it matters

SoftBank Group, led by billionaire Masayoshi Son, is considering raising more than $11 billion through junk bond issuance to increase its investment in OpenAI, the developer of ChatGPT. Sources say the company plans to issue $10 billion in dollar-denominated bonds across three tranches and 1.1 billion euros in euro-denominated bonds across two tranches. Part of the proceeds will be used to support additional investment in OpenAI, with pricing of the bonds expected this Thursday, September 24. The bond sale comes after SoftBank poured nearly $65 billion into OpenAI, making Son's company a focal point of debt-financed AI investment amid growing industry safety concerns. Discussions are still at an early stage and figures may change. SoftBank is sounding out investors on yields for the bonds but has not yet formally discussed initial yield guidance. If priced at that level, yields on each tranche are expected to set a record high for SoftBank, according to data compiled by Bloomberg. Uncertainty stemming from calls to slow AI development has also helped push up the cost of insuring SoftBank's debt against default, recently reaching a three-year high.

Impact on assets 1

Financials · 1 stocks
SoftBank Group Corp.
9984
± MixedCapitalrelevance

SoftBank is considering raising over $11 billion in junk bonds to fund additional OpenAI investment, a debt-financing event that also raises default-insurance costs.

Theme Impact 1

Off-coverage companies 1

OpenAIPrivate▲ Positive
Capitalrelevance

SoftBank's planned $11 billion+ bond issuance would provide additional investment funding to OpenAI.

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