SoftBank (learn more) Plans Record $6.3 Billion Retail Bond Sale in Japan
SoftBank plans a record 1 trillion yen retail bond sale, approximately $6.3 billion, making it the largest by any issuer in Japan. The funds will be used to support its investment commitments to OpenAI.
Analysts attribute this move to banks’ reluctance to assume the risk, leaving retail investors as the primary source of funding for this deal. SoftBank has effectively secured a "lender of last resort" from Japanese households for its AI venture.
The seven-year bonds are expected to be priced on September 4th, with an indicative coupon range of 4.3% to 4.9%. SoftBank anticipates achieving an A rating from the Japan Credit Rating Agency.
However, international credit ratings differ; S&P has rated SoftBank at BB+, one notch below investment grade, following a stable outlook update in July.
This retail bond offering is not uncommon for SoftBank; it’s their third such issuance this year, having previously raised 418 billion yen in April and 260 billion yen in June. Despite the substantial amount raised, a gap of over $20 billion remains, suggesting potential future offshore bond issuances.
SoftBank’s commitments to OpenAI are significant, exceeding $60 billion, including a $10 billion margin loan secured against its stake in the company.
Tech giants like Alphabet, Meta, Microsoft, and Amazon have also made substantial AI-related investments, committing nearly $2.4 trillion. Recently, Alibaba raised approximately $10 billion in Hong Kong for chip and data center developments.
Interestingly, a European issuer would face challenges with this type of bond sale due to PRIIPs (Packaged Retail and Insurance-based Products) rules, which often prohibit sales to retail investors. This aligns with Brussels’ goal of the Savings and Investments Union, aiming to direct European households’ €10 trillion savings into capital markets.
Japan’s approach demonstrates what mobilized savings can achieve in practice, with individual investors backing a seven-year bet on a company that hasn’t yet proven its technology’s profitability.
By Ana-Maria Stanciuc, Editor-in-Chief at TNW.