SoftBank takes on junk-bond debt at record yields to fund OpenAI ambitions

SoftBank Group, led by billionaire Masayoshi Son, has issued one of the largest junk-bond offerings in history to finance its ambitious artificial intelligence projects. The company raised approximately $11 billion in debt, primarily in dollars and euros, positioning itself as the biggest corporate junk-bond borrower globally, according to available data. Despite the high demand that helped lower pricing, borrowing costs remained significantly higher than what SoftBank had previously experienced, according to the data.

SoftBank issued $1 billion worth of 3.5-year bonds at an 8.625% yield and $4.5 billion of 5.5-year securities at a 9.25% yield, according to a source familiar with the matter. The longer-term $4.5 billion 7.5-year tranche was priced at a 9.75% yield, as noted by the source who requested anonymity due to confidentiality reasons. The yields set record highs for SoftBank's dollar bonds, coming as U.S. Treasury rates reached two-decade peaks.

The firm also issued €1 billion ($1.14 billion) in euro-denominated notes, with maturities of four and six years. The longer-term tranche was priced at an 8% yield, also a record for the term length in the currency.

Some analysts view SoftBank's debt offering as a gauge of how investors perceive financing artificial intelligence at a time of rapid technological advancements and heightened concerns over the technology's risks and the necessity for regulatory oversight. SoftBank has been actively raising debt this year to fund commitments totaling around $65 billion to OpenAI, the company behind ChatGPT, along with additional mergers and acquisitions in the sector.

As of the late afternoon of Wednesday in Asia, orders for the $10 billion portion of the deal had surpassed $30 billion, allowing SoftBank to lower yields from the initial ranges.

The surge in AI funding has raised concerns among bond investors, with global AI-related debt issuance exceeding $575 billion in 2026, as reported by Goldman Sachs Group credit strategists. The growing debt pile could pose risks to markets if the technology fails to deliver on its investment promise. This unease is evident in the market for SoftBank's credit default swaps, with prices to insure against default over the next five years rising to their highest level since April 2025, following the bank's $30 billion investment in OpenAI.

Despite these concerns, Son has dismissed worries about AI investments, stating that he anticipates AI-related industries to contribute 20% to global output by 2040, equivalent to $46 trillion.