SoftBank raises $3.6b in bond sale

SoftBank Group sold about US$3.6 billion in high-yield bonds, as its AI investments helped drive up funding costs.

The sale came amid heightened credit-market volatility linked to the Iran war.

The sale included US$1.5 billion of dollar notes and 1.8 billion euros (US$2.06 billion) of euro bonds, and its 10-year dollar bond carries an 8.5% coupon, the highest on record for SoftBank in that currency.

SoftBank last month signed a US$40 billion loan that it said will be repaid partly through asset sales.

Credit default swaps on SoftBank have risen since November, while its shares have fallen about 35% over the same period.

Earlier this month, the company raised 1.2 billion euros (US$1.41 billion) and 418 billion yen (US$2.63 billion) through separate bond sales.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

SoftBank’s rising funding costs underpin a high-stakes bet on OpenAI

Funding costs are climbing. SoftBank has put more than US$30 billion into OpenAI, equal to about an 11% stake 1.
From April to December, the stake booked a US$17 billion paper gain 1.
That lift helped Vision Fund post a US$2.4 billion gain for the December quarter 1. Losses elsewhere included Didi, a Chinese ride-hailing company 1. It also took a markdown in ByteDance, the Chinese parent company of TikTok 1.
To pay for the push, the group has sold other holdings, including US$5.83 billion of Nvidia shares and US$12.73 billion of T-Mobile stock 1.

SoftBank’s recent borrowing adds pressure to refinance and raise cash

Last month it signed a US$40 billion loan. It expects to repay part of it through asset sales.
During credit-market swings tied to the Iran war, it sold about US$3.6 billion in high-yield bonds. The deal included US$1.5 billion of dollar notes and 1.8 billion euros (US$2.06 billion) of euro bonds.
Its 10-year dollar bond pays an 8.5% coupon, a record high for SoftBank in that currency.
S&P, the credit ratings agency Standard & Poor’s, cut its outlook on SoftBank to negative from stable. The agency cited concern that OpenAI investments could strain liquidity and hurt asset credit quality.
Credit default swaps, contracts investors use to insure against a borrower defaulting, have risen since November.
Shares have fallen about 35% over the same period.
Earlier this month it raised 1.2 billion euros (US$1.41 billion) plus 418 billion yen (US$2.7 billion) in separate bond sales.