SoftBank Group's shares experienced a volatile session on Thursday, surging as much as 7% before surrendering most of those gains, as investors grappled with the financial implications of Masayoshi Son's massive bet on OpenAI.
The stock touched ¥6,793 shortly after Tokyo markets reopened from a holiday, only to slide to ¥6,351 by mid-morning before recovering to around ¥6,507. The initial jump was partly attributed to catch-up trading, as local AI and semiconductor shares responded to gains in overseas tech stocks during the break.
The market movement coincided with SoftBank completing an $11.1 billion bond sale, which will fund the final $10 billion installment of its latest $30 billion follow-on investment in OpenAI. The deal comprised $10 billion in dollar-denominated senior notes and €1 billion in euro debt.
The dollar tranches included $1 billion due in 3.5 years at 8.625%, $4.5 billion due in 5.5 years at 9.25%, and another $4.5 billion due in 7.5 years at 9.75%. The euro offering was split into two €500 million tranches paying 7.125% and 8%. Investor demand was robust, with preliminary orders exceeding $20 billion, according to Bloomberg.
From a funding perspective, the bond sale addresses a near-term refinancing need. Bloomberg Intelligence analyst Kirk Boodry noted that issuing bonds "pushes the maturity out by several years," reducing immediate pressure. However, the cost of that extended timeline is steep, with nearly half of the dollar issuance carrying a 9.75% coupon.
Analysts warned that SoftBank's funding costs are rising as offshore bond spreads widen, driven by concerns about debt supply and the company's expanding OpenAI exposure. They also highlighted that delays in an eventual OpenAI listing could postpone SoftBank's ability to monetize its stake, a central concern for equity investors.
Morningstar analyst Dan Baker suggested that recent weakness in SoftBank's stock "probably reflects the possibility that AI development may be slowed by regulators" in response to safety concerns raised by leading AI companies. This risk is amplified when capital is expensive, as OpenAI does not need to fail for SoftBank's returns to disappoint; a delayed listing, slower development, or a weaker valuation could simply push the payoff further into the future.
Once the final investment closes around October 1, SoftBank's cumulative investment in OpenAI will reach $64.6 billion. The company is borrowing at close to 10% on part of this financing, betting that OpenAI will create substantially more value over time.
This article is for informational purposes only and does not constitute financial advice.
