SoftBank Expands Credit Facility to $6.5 Billion
SoftBank Group has increased its existing credit line from $6.05 billion to $6.5 billion, according to people familiar with the matter who spoke to Bloomberg. The new facility involves over 20 banks and carries an interest margin of 210 basis points over the Secured Overnight Financing Rate (SOFR).
The previous credit line was set to expire this month, providing SoftBank with another year to access the additional funds. Whether they have drawn on these funds or plan to remains unclear, as a company representative declined to comment to Bloomberg.
Commitment lines, like those used by SoftBank, are revolving facilities that lenders offer for a specified period. Borrowers often treat them as a safety net rather than primary funding sources.
In contrast, SoftBank's other financial commitments are substantial and ongoing. The company has pledged an additional $30 billion in support of OpenAI, with the final installment due in October. This brings their total investment to $64.6 billion at a $730 billion pre-money valuation, as stated by SoftBank.
Recent activities include a $40 billion bridge loan in March, followed by term loans and secured loans backed by their OpenAI stake. On the same day as the credit line announcement, Bloomberg reported that SoftBank increased its margin loan backed by ARM to $25 billion. Additionally, Apollo Global Management is negotiating to increase their loan to $9 billion from $5.4 billion.
SoftBank has also been in discussions with fixed-income investors in New York to explore a potential $10 billion to $20 billion junk bond offering, although nothing concrete has been determined.
The backdrop to these financial maneuvers is a market growing increasingly cautious about debt-funded AI, as evidenced by delays in OpenAI's initial public offering (IPO) due to safety concerns. The cost of insuring SoftBank's debt against default reached a three-year high this week, highlighting the heightened risk perception.