Amid the global trade turmoil wrecking havoc in markets across the planet, Japanese technology investment conglomerate SoftBank has reportedly plans to raise $4.1 billion (~ 600 billion yen) through a retail bond issuance, marking its largest bond offering to date. According to a report by Reuters, the bonds (maturing in May 2030) will offer returns between 3% and 3.6%, with the exact rate to be finalized on April 18.
There are two main reasons SoftBank is raising this large amount of money – first, to redeem existing bonds and second, to partially finance the acquisition of shares in the chip designer Arm Holdings from SoftBank’s Vision Fund (a transaction that took place in August 2023).
The development comes at a time when despite its ambitious ventures, SoftBank is also facing several financial challenges. SoftBank’s ‘Vision Fund’ reported a $2.4 billion loss in the quarter ending December 2024, reversing gains from previous quarters. Additionally, the high debt levels and investment losses have raised concerns among credit rating agencies as well. In fact, last week S&P Global indicated that SoftBank’s financial condition is likely to worsen, potentially leading to a rating downgrade.
Speaking of numbers, as of December 2024, SoftBank’s loan-to-total-assets ratio stood at 12.9%, below its target of 25%. The company currently has around $47.83 billion (~ 7 trillion yen) in outstanding bonds. Experts believe that the latest move to issue retail bonds shows the company’s strategy to manage its debt obligations effectively while continuing to invest in key technology sectors like artificial intelligence (AI).
Notably, Masayoshi Son-led SoftBank’s strategy has heavily relied on debt financing to fund its large-scale investments. For example, recently the company plans to borrow $10 billion from Mizuho and other lenders to finance its initial investment in OpenAI, with an additional $30 billion due by early 2026. Earlier reports indicated that SoftBank is seeking a loan of up to $16.5 billion to finance its artificial intelligence (AI) investments in the United States. This would represent SoftBank’s largest borrowing denominated solely in dollars.
Meanwhile, one of SoftBank’s most ambitious AI ventures is the Stargate AI project, a large-scale initiative focused on developing advanced AI infrastructure. The project is a joint effort involving OpenAI, Oracle Corporation, and Abu Dhabi’s MGX Fund. However, despite these partnerships, SoftBank remains the primary financial backer of the initiative. Interestingly, Masayoshi Son serves as the chairman of Stargate LLC, the entity overseeing this venture.
The project aimed at investing up to $500 billion in AI infrastructure in the United States over the next four years. The project commenced with an initial investment of $100 billion, with SoftBank and OpenAI each committing around $19 billion. The main objective of this initiative is to boost AI capabilities and infrastructure, as well as create over 100,000 jobs in the country.
