SoftBank Issues 90 Billion Yen in Bonds to Support AI Investments, Rate Hits Yearly High

SoftBank Group announced on Wednesday (29th) the issuance of ¥90 billion (approximately $550 million) in bonds to institutional investors, aiming to expand domestic and international financing channels to support its massive investments in artificial intelligence (AI).

The bond issuance consists of ¥80 billion in three-year notes and ¥10 billion in five-year notes. Due to investor preference for shorter-term bonds in a rising interest rate environment, the three-year issuance was significantly increased from the originally planned ¥50 billion.

The coupon rates for the three-year and five-year bonds are 3.270% and 3.886%, respectively—both reflecting Japan's rising interest rate trend and setting the highest rates this year for Japanese corporate bonds of the same maturities.

This move comes as SoftBank CEO Masayoshi Son pledges to 'fully commit' to investments related to OpenAI, with the company's investment commitments already exceeding $60 billion. To raise such substantial funds, SoftBank has adopted a diversified financing strategy, including this bond issuance, issuing subordinated bonds to retail investors this year, and issuing dollar- and euro-denominated bonds overseas.

Although SoftBank carries a heavy debt burden, its credit outlook has improved. S&P Global Ratings recently upgraded SoftBank's rating outlook from 'Negative' to 'Stable' this month, benefiting from the rising stock price of its subsidiary, Arm Holdings.

While some financing initiatives (such as equity-backed loans on OpenAI shares) have stalled, this bond offering received oversubscription from institutional investors such as life insurers and trust banks, indicating that market support for SoftBank's AI strategy remains robust.