SoftBank Group is preparing to launch Japan's largest-ever retail bond offering, seeking to raise about ¥1 trillion ($6.3 billion) to support its artificial intelligence investments, including commitments to OpenAI, Bloomberg reported.
The seven-year bonds are expected to be priced on September 4, with an indicative coupon of between 4.3% and 4.9%. Japan Credit Rating Agency is expected to assign the securities an A rating. SoftBank shares fell 5.3% to ¥4,975 in Tokyo following the announcement.
The proposed issue would be SoftBank's third retail bond sale this year. The company raised ¥418 billion in April and another ¥260 billion in June.
Bond Proceeds To Support AI Strategy
SoftBank plans to use around ¥400 billion of the proceeds to refinance retail bonds that mature in September. The remaining funds will help finance its broader AI investment strategy.
The Japanese conglomerate has committed more than $60 billion towards OpenAI and has been stepping up spending on data centres as it seeks to expand computing infrastructure.
The aggressive investment comes amid a global race to build AI capabilities, although concerns remain over the ability of companies to monetise the technology, potential excess capacity and rising corporate debt.
Retail Investors Key To SoftBank's Fundraising
The scale of the proposed bond issue places significant importance on demand from Japanese retail investors. Analysts expect the final coupon to be near the upper end of the proposed range, reflecting the need to attract buyers.
SoftBank could still face a funding gap of more than $20 billion following the bond issue, potentially prompting additional offshore borrowing, according to analysts.
S&P Global Ratings revised SoftBank's outlook to stable from negative in July while retaining its BB long-term issuer credit rating, which remains below investment grade.
The fundraising comes as major technology companies ramp up AI spending. Alphabet, Amazon, Meta and Microsoft have collectively committed around $2.4 trillion towards AI-related expenditure over the coming years, highlighting the enormous capital requirements of the sector.
