SoftBank Group plans record $8b retail bond sale in Japan
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SoftBank is expected to price its seven-year bonds between 4.3 per cent and 4.9 per cent.
PHOTO: AFP
- SoftBank Group plans to issue a record one trillion yen (S$8 billion) retail bond in Japan to fund investments in OpenAI and refinance existing debt.
- The seven-year bonds will likely offer a 4.3-4.9% coupon, targeting retail investors amid limited bank appetite due to credit risks and long duration.
- SoftBank has committed over US$60 billion to AI investments, faces a US$20 billion funding gap, and may issue more offshore bonds despite improved credit outlook.
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SoftBank Group plans a record one trillion yen (S$8 billion) retail bond sale, the biggest by any issuer in Japan, as the conglomerate raises funds for its investment commitments to OpenAI.
The seven-year bonds are expected to be priced on Sept 4, with an indicative coupon range of 4.3 per cent to 4.9 per cent, according to a company filing.
SoftBank’s move is the latest in a global rush to amass funds in the hyper-competitive race for global leadership in artificial intelligence.
Alphabet, Meta Platforms, Microsoft and Amazon.com – the four largest players in the data centre race – have pledged nearly US$2.4 trillion (S$3.05 trillion) in AI-related spending over the coming years.
On Aug 24, Alibaba Group Holding raised the equivalent of US$10 billion in Hong Kong’s biggest-ever secondary share sale to help fund its efforts to pour money into chips, data centres and large-language models.
SoftBank plans to use the proceeds from the issuance to refinance 400 billion yen of retail bonds maturing in September and to secure funding for its AI strategy investments, a company spokesperson said in an e-mail.
The Japanese company has committed more than US$60 billion to invest in the ChatGPT developer and has been accelerating investments in data centres as it seeks to expand computing capacity. The spending comes as questions about how to monetise the technology persist alongside warnings about overcapacity, growing corporate debt and the circular nature of many AI fund-raising deals.
SoftBank said in a media statement on Aug 24 that it expects the bonds to get an A rating from Japan Credit Rating Agency. The company’s shares fell 5.3 per cent to 4,975 yen in Tokyo.
“The company is betting that retail investors will buy a product offering an attractive yield, and it appears confident it can tap demand at a time when there are few fixed-income products that can beat inflation,” said Yuuki Fukumoto, senior financial researcher at NLI Research Institute.
“Banks are finding it difficult to take on the risk given weak deposit growth, the credit rating and the seven-year duration, leaving the deal more reliant on retail investors,” he said.
The offering will be SoftBank’s third retail bond sale in 2026, after it raised 418 billion yen in April and 260 billion yen in June.
The new retail bond is likely to price towards the upper end of the indicated coupon range, according to Sharon Chen, a credit analyst at Bloomberg Intelligence. The company faces a shortfall exceeding US$20 billion even after this bond issue, signalling a high likelihood of offshore bond issuance in the near-term, she added.
S&P Global Ratings revised its outlook on SoftBank to stable from negative on July 16, saying key financial ratios had improved more than previously expected. It affirmed the group’s long-term issuer credit rating at BB+, one notch below investment grade. BLOOMBERG
