SoftBank Group has a payment of $10 billion coming due to OpenAI on October 1, and it is turning to the bond market to write the check. The Japanese conglomerate launched about $11 billion of debt on Monday, a move designed to fund the payment and to retire a bridge loan it had arranged for the same purpose.
The offering consists of $10 billion of dollar-denominated senior unsecured notes and €1 billion of euro-denominated notes, according to a term sheet seen by Reuters. The proceeds will be used to cover the $10 billion payment for the third and final tranche of SoftBank’s follow-on investment in OpenAI, which is expected to close on October 1, with the remainder available for general corporate purposes.
The new bonds will also cancel a $10 billion bridge loan that SoftBank had earlier secured to fund the investment, the term sheet said. The offering is set to price on September 24 and settle on September 29. Bloomberg reported that a transaction of this size would rank among the largest junk-bond sales by a single company, excluding distressed-debt exchanges.
The mechanics of the deal trace back to February, when SoftBank agreed to invest an additional $30 billion in OpenAI through its Vision Fund 2, payable in three installments of $10 billion each in April, July and October. At the time, SoftBank said the investment would be financed initially through bridge loans and later replaced by longer-term funding.
The October payment is the last of the three, and the bond sale is the replacement SoftBank described at the time. The company has been steadily swapping short-term borrowing for longer-dated debt, a process that keeps its OpenAI position funded while stretching the repayment schedule out over years.
The total commitment has made SoftBank one of OpenAI’s largest backers, and it has been assembled almost entirely with borrowed money. That concentration is the reason the market is now watching SoftBank’s balance sheet more closely than it has in years, according to analysts.
The scrutiny has already shown up in prices. The yield on SoftBank’s dollar bonds due in 2031 has risen to about 8.2 percent this month from roughly 6.7 percent in January, and the cost of insuring the company’s debt against default has climbed to a three-year high, according to market data.
SoftBank has moved to manage the load. In early September the company said it had repaid $25.9 billion of the $30 billion it had drawn against a $40 billion facility arranged in March, leaving about $4.1 billion outstanding, according to company statements. The repayment is part of why the fresh $11 billion raise reads as refinancing rather than an escalation, analysts said.
The bridge-loan-to-bond sequence is a standard piece of corporate finance, but the scale here is not. SoftBank is using the junk-bond market to hold a stake in a private company whose value rests on a single technology, and it is doing so while carrying out other acquisitions, including an approximately $5.4 billion purchase of ABB’s robotics business.
Some credit analysts said the structure gives SoftBank additional time to finance its OpenAI exposure, replacing temporary borrowing with bonds that carry maturities extending beyond seven years. Others noted that the interest bill keeps growing even as the investment has yet to generate cash.
The company has framed its OpenAI position as a long-term bet on artificial intelligence, one it expects to fund from a mix of existing assets and future financing. For now, the bond market has agreed to carry the bet, though at a price that reflects how much debt SoftBank has already taken on.
Whether that support holds depends on what happens to OpenAI’s valuation, which is not quoted on any exchange. The absence of a public price means SoftBank’s lenders are financing an asset whose value they cannot see traded, a position that makes the October payment something more than a routine installment.
The sequence of financing shows how the deal was assembled from the start. In March, SoftBank arranged a $40 billion bridge facility with a small group of lenders, including JPMorgan, to fund the bulk of its OpenAI push. It drew against the facility as each installment came due, then began paying it down as longer-term funding arrived. The new bond sale continues that pattern, converting the last of the short-term borrowing into debt that matures years from now and turning what could have been a lumpy repayment schedule into a steadier stream of interest.
The first two tranches went through quietly. The third is arriving at a moment when credit investors are asking harder questions about how much AI-related debt one company can carry, and SoftBank’s answer, for now, is an $11 billion bond sale, its size a measure of the stake it has decided to hold.
