SoftBank issues record $11 billion junk-bond offering

SoftBank has launched a record $11 billion junk-bond offering, featuring its highest-ever yields of up to 9.75 per cent. The debt issuance, which includes a bond maturing in 2034, is intended to fund the conglomerate's massive investments in artificial intelligence while allowing the company to retain assets it expects will appreciate in value.

CEO Masayoshi Son has heavily backed the AI sector, including a total of $64.6 billion in backing for OpenAI. This strategy has positioned SoftBank as a bellwether for AI market sentiment. However, the high borrowing costs and the scale of these investments have drawn scrutiny from analysts regarding portfolio concentration and the timeline for significant returns on AI expenditures.

Alex Clavel, CEO of SoftBank Investment Advisers, noted that the decision to borrow rather than sell assets like Nvidia or T-Mobile US is driven by the belief that current holdings will continue to rise in value. The company's strategy also involves significant stakes in Arm, which has seen its valuation grow fivefold since its 2023 float.