SoftBank (SFTBY.US) Issues Highest-Yield Yen Institutional Bonds of the Year, Raising 90 Billion Yen to Replenish AI “Ammunition”

According to Zhitong Finance APP, SoftBank Group (SFTBY.US) finalized the pricing for a 90 billion yen (equivalent to $550 million) bond issuance targeted at institutional investors on Wednesday. This move aims to expand the company's domestic and international financing channels, raising funds for its massive investments in the artificial intelligence (AI) sector.

According to lead underwriter Daiwa Securities, this issuance includes 80 billion yen in three-year notes and 10 billion yen in five-year notes. The three-year tranche carries a coupon rate of 3.270%, while the five-year tranche’s coupon is 3.886%, both marking the highest coupon rates for corporate bonds with similar maturities issued to institutional investors in Japan this year. In terms of pricing, the spread over Japanese government bonds is 165 basis points for the three-year tranche and 190 basis points for the five-year tranche.

It was also disclosed that the three-year tranche, initially planned at 50 billion yen, was increased to 80 billion yen, reflecting investors' preference for shorter maturities in a rising interest rate environment.

Subscribers include life insurance companies, investment advisors, trust banks, and regional banks, among other institutions. The final subscription multiple for the five-year tranche was about 1.2 times the issuance size.

Currently, with domestic interest rates in Japan continuing to rise, investor demand remains strong, and SoftBank is taking advantage of this momentum to accelerate its financing efforts.

With growing funding needs—especially for investments in US tech giant OpenAI—SoftBank continues to broaden its financing base. Founder and CEO Masayoshi Son has publicly stated his intention to “commit fully” to OpenAI, with pledged investments now exceeding $60 billion. Of these, a $40 billion bridge loan raised for investing in OpenAI has already attracted participation from 21 new banks in a broader syndicated stage.

Previously, SoftBank had planned to raise at least $6 billion through margin loans using its stake in OpenAI as collateral, but related negotiations have stalled. Just a few weeks ago, the Japanese conglomerate had also cut its initial financing target from $10 billion.

In addition to bank loans, SoftBank has this year also issued subordinated bonds aimed at individual investors and floated dollar- and euro-denominated bonds in overseas markets, clearly demonstrating its strategic intention to raise funds from a diverse investor base and multiple markets.

So far this year, SoftBank has raised a total of 678 billion yen through subordinated bonds for individual investors. In April, the company also raised about 570 billion yen via dollar and euro bond issuances.

Despite a significant increase in debt burden, S&P Global Ratings this month revised SoftBank’s BB+ rating outlook from “negative” to “stable.” S&P cited the rising share price of its subsidiary Arm (ARM.US) as a key support for the revised outlook.