SoftBank (SFTBY.US) prices the most expensive yen retail bond in history: the first five-year coupon rate of 4.97%, raising 418 billion yen to support the AI gamble.

SoftBank Group (SFTBY.US) recently completed a yen-denominated hybrid bond pricing targeted at individual investors, with an initial five-year coupon rate set at 4.97%, marking the highest level in the company's history of issuing such bonds. The offering size was 418 billion yen (approximately $26 billion), consisting of 35-year subordinated notes that can be redeemed early after five years. According to the company's statement, the proceeds will be used in part to repay existing hybrid bonds due for redemption in June 2026. Compilation data shows that the coupon rate is the highest among yen-denominated retail bonds issued by non-financial corporations in Japan. SoftBank has been accelerating its investment in artificial intelligence (AI), sparking concerns in the market about its liquidity and financial flexibility deteriorating, and increasing the risk of rating downgrades. Meanwhile, SoftBank Group's subsidiary SoftBank Corp. is considering its first Euro-denominated bond issuance. According to sources familiar with the matter, the company plans to offer benchmark-sized fixed-rate senior unsecured notes with maturities of six and ten years. Intensive deployment to support AI expansion, rating outlook under pressure This ongoing capital pursuit is closely related to SoftBank's increasing investment in OpenAI. SoftBank Group reportedly obtained a $40 billion bridge loan from a banking consortium at the end of March, with most of the funds injected into the American AI developer through Vision Fund 2. The new $30 billion round of investment will further increase SoftBank's existing stake in OpenAI from around 11% to about 13%, with a focus on supporting the "Gate to the Stars" project to accelerate the construction of AI data centers. However, large-scale investments and financing plans have put pressure on SoftBank Group's credit metrics. S&P Global, Inc. downgraded the company's rating outlook to "Negative" in early March, despite maintaining a long-term corporate credit rating of "BB+," analysts explicitly stated that the expansion of financial exposure to OpenAI and the massive financing needs were the main reasons for the adjustment. Since the beginning of the year, SoftBank Group's stock price has fallen by about 14%, underperforming the market, and the credit default swap (CDS) spread, which measures credit risk, has widened by about 20%. In addition to financing activities, SoftBank is also advancing its AI strategy through operational restructuring. Founder Masayoshi Son is restructuring the management team, and Arm Holdings, a chip design company under SoftBank's control, CEO Ren Haas will expand his responsibilities to oversee the semiconductor, AI, and Siasun Robot & Automation businesses, driving the development of SoftBank's in-house AI chip project, the "izanagi plan." At the same time, SoftBank is progressing with a capital alliance with Tokyo Electric Power Company (TEPCO) to secure power supply for AI data centers and obtain low-carbon energy, enhancing its AI infrastructure layout.