Why is SoftBank Group stock tumbling today?

SoftBank Group's stock plummeted by 8.1% to ¥5,360 on Wednesday, driven by a dual shock of a massive debt issuance announcement and a steep decline in the bond market impacting Japan's AI and technology sector. The day's market movement was prompted by a Nikkei report revealing that the company plans to issue around ¥1 trillion in seven-year bonds, primarily aimed at retail investors.

This massive bond issuance, if executed, would be the largest retail corporate bond offering by a Japanese company, further exacerbating concerns over SoftBank's already substantial debt burden. The bond deal was compounded by a backdrop of rising sovereign yields. The 10-year Japanese government bond yield hit its highest level in 26 years, spurred by speculation that the Bank of Japan might tighten monetary policy as early as September, while U.S. 30-year Treasury yields also hit a 19-year peak.

Analysts argued that escalating borrowing costs pose a direct threat to the profitability of AI infrastructure investments, thereby undermining the valuation of companies like SoftBank, whose investment strategy hinges on long-term, capital-intensive AI projects. The negative trend extended beyond the SoftBank stock, as Japan's Nikkei 225 index suffered a second consecutive day of losses, plummeting by 3.1% in early trading, while the broader Topix index fell by 2.8%. Electronics and financial stocks were particularly hard hit by the sell-off.