SoftBank raises $11bn in record junk bond offering to fund OpenAI bet

{"text":[[{"start":9.16,"text":"SoftBank has completed the largest junk bond offering on record, paying investors yields as high as 9.75 per cent in its latest push to fund the AI ambitions of founder Masayoshi Son."}],[{"start":21.46,"text":"The Japanese tech group raised the equivalent of $11.1bn — including €1bn — as part of a deal that will help fund the third tranche of its massive investment in OpenAI that is due to be completed next month."}],[{"start":35.68,"text":"Including the euro bonds, the deal by SoftBank eclipses the more than $10bn raised in 2014 by Numericable, which was controlled by France’s Altice, said analysts and bankers involved with the deal."}],[{"start":47.8,"text":"It is also being taken by some investors as an indicator of the market’s willingness to keep funding the AI boom, despite growing concerns about the growing size of the debt pile being accumulated across the sector."}],[{"start":60.2,"text":"Satoru Aoyama, an analyst with Fitch Ratings, said the sector was increasingly moving beyond investment-grade borrowing from hyperscalers and private credit. “Now, boom, we get a high-yield market with [SoftBank] issuing the biggest bond in high-yield history,” he added."}],[{"start":76.28,"text":"Fitch has given SoftBank a double B plus rating, its highest non-investment grade."}],[{"start":81.08,"text":"The dollar bonds sold by SoftBank across different maturities attracted yields of between 8.63 per cent and 9.75 per cent, while demand was three to four times the amount on offer, according to the bankers."}],[{"start":93.8,"text":"The deal was led by Citi and involved SoftBank tapping US institutional investors at scale, including US asset managers and passive investors that were buying to maintain exposure to high-yield bond indices."}],[{"start":105.2,"text":"“The only way to raise this kind of money is to target the largest capital pool in the world,” said one person involved in the sale. The group also sold a record ¥1tn ($6bn) in bonds to retail investors in Japan earlier this month."}],[{"start":null,"text":"

"}],[{"start":121,"text":"The yield being paid by SoftBank is a reflection, say the bankers, of the sharp rise in US Treasury rates this year, the sheer size of the deal, the growing nervousness about the future of AI and specifically SoftBank’s exposure to OpenAI."}],[{"start":134.64,"text":"SoftBank has taken on tens of billions in debt to fund Son’s ambitions and its net debt stood at ¥10.8tn at the end of June."}],[{"start":143.36,"text":"However, its share price — despite high levels of volatility — remains a third higher than it was a year ago."}],[{"start":150.04,"text":"The group’s loan-to-value ratio remains within its own set limits of 25 per cent under normal conditions."}],[{"start":156.52,"text":"The bond sale is part of SoftBank’s effort to replace temporary bank financing raised for its OpenAI investment with longer-term funding. SoftBank said this month that it would repay the remaining $25.9bn outstanding under a $40bn bridge facility."}],[{"start":172.6,"text":"Yet there are persistent and growing questions about how to continue financing Son’s ambitions, particularly since the OpenAI initial public offering is now unlikely to take place before 2027."}],[{"start":184.16,"text":"Further concerns surround the more imminent flotation of SoftBank’s data centre developer SB Energy."}],[{"start":195.68,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1790250931_5849.mp3"}