SoftBank raises US$11.1bil in record high-yield bond sale

SoftBank Group has successfully raised US$11.1 billion through the largest high-yield corporate bond sale globally on record. The record-breaking issuance was aimed at funding its significant investment in OpenAI, the maker of ChatGPT. This follows a previous bond sale of US$6.3 billion targeting retail investors this month. SoftBank's stake in OpenAI, under the leadership of founder Masayoshi Son, is set to reach approximately 13% by next week.

The conglomerate has also committed US$64.6 billion to the AI-focused company, which includes acquisitions of ABB's robotics business and DigitalBridge. The high yields on these bonds are necessary to cover SoftBank's substantial investments in AI. The size of the AI-related investments has led to higher yields and increased costs of insuring the debt against potential default.

This marks a shift as hyperscalers in the US have previously raised debt with higher credit ratings, but now AI-driven debt issuance is reaching the high-yield market at scale. Despite the challenges, SoftBank continues to see strong market appetite for its high-yield bonds, with CreditSights head of telecom and media Mark Chapman suggesting a potential ratings upgrade if OpenAI's IPO is timely and successful.