SoftBank Issues $11.1 Billion in Bonds for Final OpenAI Investment Payment

The sale helps fund a $10 billion installment due to close October 1, while adding to questions about SoftBank’s borrowing.

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SoftBank Issues $11.1 Billion in Bonds for Final OpenAI Investment Payment
SoftBank Issues $11.1 Billion in Bonds for Final OpenAI Investment Payment

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SoftBank has raised about eleven point one billion dollars in bonds, putting financing in place for the final ten-billion-dollar payment on its OpenAI investment. The payment is expected to close October first, but the bond sale is not the investment closing. The issuance combines ten billion dollars in dollar notes with one billion euros’ worth of euro notes, about one point one four billion dollars. SoftBank says proceeds will help pay OpenAI and cover general corporate purposes, so the entire raise is not committed to the deal. This is the last installment of a thirty-billion-dollar follow-on investment agreed in February. If it closes as expected, SoftBank’s total investment in OpenAI reaches sixty-four point six billion dollars, for an approximately thirteen percent stake. The financing also sharpens a debt question. Earlier reporting said SoftBank had arranged up to forty billion dollars in short-term loans for the investment, with plans to replace them with longer-term borrowing. It is unclear how much of that capacity these bonds replace. Reports have also warned refinancing could temporarily put SoftBank above its own debt ceiling. Longer-term debt changes when repayment is due; it does not erase the obligation. OpenAI is also a prospective customer for SoftBank’s data-center business. Its forecast to use nearly two hundred eighty billion dollars in cash through 2030 is OpenAI’s spending projection, not a SoftBank funding pledge. SoftBank shares rose more than seven percent when Japanese markets reopened, but that is only an immediate market reaction. The next concrete test is the expected October first close—and how much borrowing remains after it.

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3 key points

SoftBank’s $11.1 billion bond sale gives the Japanese group financing ahead of the expected October 1 close of its final $10 billion installment in a $30 billion follow-on OpenAI commitment. The proceeds also cover general corporate purposes, so the entire raise is not dedicated to OpenAI. If completed, the transaction would bring SoftBank’s cumulative OpenAI investment to $64.6 billion and its stake to about 13%....

  1. 01

    The issuance comprises $10 billion in dollar notes and €1 billion in euro notes, worth about $1.14 billion; proceeds also fund general corporate purposes.

  2. 02

    SoftBank previously arranged up to $40 billion in short-term loans for OpenAI; how much the bonds replace is unknown, and refinancing may temporarily push it above its debt ceiling

  3. 03

    SoftBank shares rose more than 7% after Japanese markets reopened, an immediate reaction that does not establish how the financing or investment will perform.

SoftBank has issued about $11.1 billion in bonds to help make the final $10 billion payment on its follow-on OpenAI investment. The borrowing puts cash behind a deal expected to close October 1, while bringing SoftBank’s debt commitments further into focus.

The money raised—and the stake ahead

The sale consists of $10 billion in dollar-denominated senior notes and €1 billion in euro-denominated notes, worth about $1.14 billion. SoftBank said the proceeds will help pay OpenAI and cover general corporate purposes. The full amount is therefore not earmarked for the investment.

The payment is the third and final part of a $30 billion follow-on investment SoftBank agreed to in February. If it closes as expected, SoftBank’s cumulative investment in OpenAI will reach $64.6 billion, giving it an approximately 13% stake. Issuing the bonds supplies financing; the investment itself has yet to close.

New bonds against an earlier loan plan

Before the issuance, the Financial Times reported, through The Decoder, that SoftBank had arranged short-term loans of up to $40 billion for OpenAI and planned to replace them with longer-term debt. How much of that earlier loan capacity the bond sale replaces is unclear. Longer-term borrowing can move repayment further out, but it does not remove the obligation.

That earlier account described the planned bonds as high-yield, or junk, debt. Such bonds pay higher interest because investors face greater risk than they do with safer corporate debt. The description preceded the completed sale, so it should not be read as a confirmed assessment of the notes SoftBank ultimately issued.

OpenAI’s role beyond the shares

SoftBank is also counting on OpenAI contracts for future revenue at its data-center business, The Decoder reported. That makes OpenAI both a major investment and a prospective customer. The Financial Times reported that OpenAI expects to use nearly $280 billion in cash by the end of 2030—a forecast about OpenAI’s spending, not a SoftBank funding commitment.

SoftBank shares rose more than 7% as Japanese markets reopened after a three-day holiday and the company announced the bond sale. That immediate market reaction contrasts with the longer wait to see how the investment and the borrowing perform.

Sources

  1. cnbc.comSoftBank shares jump over 7% after $11.1 billion bond issuance to fund OpenAI bet
  2. the-decoder.comSoftBank to borrow over $11 billion in risky bonds for OpenAI stake

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