Softbank seeks US$11bn in junk bonds for OpenAI

Softbank Group Corp is seeking the equivalent of more than US$11 billion in what would be one of the biggest junk bond deals ever, people familiar with the matter said yesterday, as billionaire Masayoshi Son’s conglomerate ramps up its investments in ChatGPT, creator OpenAI.

The company is looking to issue US$10 billion of dollar securities across three tenors, and 1 billion euros (US$1.15 billion) of euro debt across two maturities, said people who asked not to be identified as the discussions are private.

The money would be used in part to fund a follow-on investment in OpenAI expected to close next month, the people said.

Masayoshi Son, chairman and CEO of Softbank Group, speaks during a business event in Tokyo on July 14.

Photo: AP

The deal might price on Thursday, they added.

One of the world’s largest investors in artificial intelligence (AI), Softbank’s fortunes have become increasingly intertwined with its ability to monetize its holding in OpenAI after committing close to US$65 billion to the tech pioneer.

That has put Son’s firm at the epicenter of debt-fueled bets on AI at a time when safety concerns about the industry have flared.

The company declined to comment.

As part of its funding campaign this year, Softbank has sold almost US$15 billion of notes across currencies, making it the biggest junk-rated borrower in bond markets so far this year, Bloomberg-compiled data show.

There was also a US$10 billion loan earlier this year backed by its OpenAI stake.

OpenAI chief executive officer Sam Altman’s remarks that the company will not go public this year, a move that would increase the liquidity of Softbank’s investments, have been closely watched by investors.

If Softbank sells about US$11 billion in debt, it would be one of the largest junk bond sales ever by a single firm, excluding distressed debt exchanges.

Citigroup Inc is acting as the lead bookrunner and a joint global coordinator, alongside Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley for dollar tranches. JPMorgan is the lead bookrunner for the euro-denominated notes and among the joint global coordinators, together with Goldman Sachs and Deutsche Bank AG.

Softbank is rated at “BB+” by S&P Global Ratings and Fitch Ratings, their highest speculative-grade ratings.

By contrast, Alphabet Inc and Amazon.com Inc, the two biggest sellers of corporate bonds this year, have ratings of “AA+” and “AA” respectively, higher than the Japanese sovereign.