The term sheet that reached investors this week set out a shape the bond market knows well: three tranches of dollar notes, maturities staggered out to seven and a half years. What drew the market’s attention was not the structure but the price.
SoftBank Group is raising $10 billion in the corporate bond market to help pay for its investment in OpenAI, according to the term sheet. The Japanese conglomerate plans to sell $1 billion of three-and-a-half-year notes, $4.5 billion of five-and-a-half-year notes, and $4.5 billion of seven-and-a-half-year notes.
Investors were told to expect yield guidance of 8.75 percent to 8.875 percent on the shortest tranche, 9.375 percent to 9.5 percent on the five-and-a-half-year paper, and 9.75 percent to 9.875 percent on the longest, according to the term sheet. Early orders have already exceeded $20 billion, more than twice the amount on offer, people familiar with the matter said.
The sale is, in substance, a refinancing. SoftBank earlier secured a $10 billion bridge loan to fund part of its stake in the ChatGPT maker, and the new notes will retire that facility, the term sheet showed.
The coupons carry the sharper story. A blue-chip borrower paying close to 10 percent to borrow for seven years is a borrower whose ambitions have grown faster than its balance sheet, and SoftBank’s wager on OpenAI ranks among the largest single-company bets ever placed on artificial intelligence. The group said in February it would invest an additional $30 billion in OpenAI, adding to money it had already committed, making it one of the startup’s largest shareholders.
The demand has arrived regardless. Orders above $20 billion suggest investors still want a way into the AI buildout even at yields that would have been unthinkable for SoftBank a decade ago, when its bonds carried coupons in the low single digits. The oversubscription lets the group price the deal at the tight end of guidance, but the sheer level of the rates is what will linger.
The yields being quoted put the notes roughly in line with high-yield borrowers rather than the investment-grade companies SoftBank once resembled. A year ago the group could borrow at a fraction of these coupons. The jump reflects both its heavy debt load and the market’s reassessment of how much risk now sits inside an AI balance sheet.
The same week supplied the other side of the trade. SB Energy, the data-center and power developer backed by SoftBank, OpenAI and Nvidia, postponed its initial public offering after demand fell short of expectations, according to people familiar with the matter.
SB Energy had filed to list on Nasdaq in early September, seeking to raise roughly $5 billion to $7 billion, and its own prospectus disclosed that the company was “substantially dependent” on OpenAI as both a tenant and an equity investor. The company has 8.8 gigawatts of data-center capacity contracted or under construction across Texas and Ohio, but none of its data centers were producing revenue at the time of the filing.
Read together, the two events point in the same direction. Equity investors balked at the valuation of an AI infrastructure company that has yet to earn from its core business, while bond investors lined up to lend to its parent at yields near double digits. The money that finances the AI boom is getting more expensive.
That tightening has been building for months. As the largest AI projects have multiplied, each requiring tens of billions of dollars for chips, power and data centers, lenders have begun asking harder questions about whether the revenue will arrive in time to service the debt. The answer, so far, has been higher coupons across the sector.
The bond deal is one strand of a much larger commitment. SoftBank is also a financial backer of Stargate, the data-center venture built around OpenAI, a project whose estimated cost has been put in the hundreds of billions of dollars. Son has framed the OpenAI relationship as the centerpiece of a second act for the group after years spent repairing its balance sheet.
The group enters this stretch from a position of relative strength. The turnaround of Arm, the chip designer SoftBank took public in 2023, has lifted the value of the group’s holdings, and its net asset value has recovered sharply from the Vision Fund’s worst days. That cushion is what lets the group borrow on this scale again, even at the higher rates investors now demand.
For SoftBank, the move is of a piece with its history under chief executive Masayoshi Son, who has spent four decades borrowing heavily to back companies he believes will define the next era of computing. That approach nearly sank the group when its Vision Fund bets soured in 2021 and 2022, forcing Son into a defensive crouch and a wave of asset sales. The bond sale shows the group back on the offensive, this time in AI.
Whether the wager pays off rests on OpenAI, which is spending far more than it earns as it builds the computing backbone behind its models. SoftBank has tied a large share of its future to that outcome. The bondholders, at least, are being paid to wait.
