SoftBank junk bond sale raises stakes for CEO Son's all-in AI bet

SoftBank's record $11 billion junk bond offering reveals CEO Masayoshi Son's high-stakes all-in bet on artificial intelligence (AI). The bond issuance comes as corporate borrowing has surged in 2023, driven by decisions from major companies like Amazon, Alphabet, and Tencent. Son's investments, totaling $64.6 billion in OpenAI, have positioned SoftBank as a bellwether for AI sentiment.

However, analysts and investors are scrutinizing the heavy concentration in SoftBank's portfolio and the timing of potential payoffs from these AI-related expenditures. To maintain assets they believe will appreciate, SoftBank is borrowing at record yields of up to 9.75% in issuing the bonds. Sam Altman's OpenAI, the core investment in Son's latest strategy, has seen significant appreciation, making the 9.75% coupon on the bond issued last month appear reasonable.

Nonetheless, the high valuation and concentration of bets on AI-driven businesses have raised concerns among some analysts about the risks involved.