Softbank Group Corp has priced a yen-denominated hybrid bond targeting individual investors with an initial five-year coupon rate of 4.97%, the highest the company has ever offered for this type of bond. The issuance raised 4180 billion yen (approximately $26 billion) and consists of 35-year subordinated notes that can be redeemed after five years. According to a company statement, part of the proceeds will be used to repay existing hybrid bonds whose first redemption date falls in June 2026. Data shows this coupon rate is the highest among yen retail bonds issued by Japanese non-financial companies. Softbank has been accelerating its investments in artificial intelligence, raising market concerns over potential deterioration in its liquidity and financial flexibility, as well as increasing the risk of a credit rating downgrade. Meanwhile, Softbank Corp, a subsidiary of Softbank Group, is considering issuing euro-denominated bonds for the first time. People familiar with the matter said the company plans to issue benchmark-sized fixed-rate senior unsecured notes with tenors of six and ten years.
This ongoing capital-raising effort is closely linked to Softbank's increasing investment in OpenAI. In late March, Softbank Group secured a $40 billion bridge loan from a banking consortium, with most of the funds being channeled through Vision Fund 2 to the U.S.-based AI developer. A new round of $30 billion in funding is expected to further increase Softbank's existing stake in OpenAI, potentially raising its ownership from around 11% to approximately 13%. These funds will primarily support OpenAI's "Stargate" project, accelerating the construction of AI data centers. However, the large-scale investment and financing plans have put pressure on Softbank's credit metrics. S&P Global Ratings downgraded Softbank Group's outlook to "negative" in early March, although its long-term issuer credit rating remains at "BB+". Analysts cited the expanded financial exposure to OpenAI and significant funding needs as key reasons for the adjustment. So far this year, Softbank Group's share price has fallen about 14%, underperforming the broader market, while its credit default swap spread has widened by roughly 20%.
In addition to financing activities, Softbank is advancing its AI strategy through operational restructuring. Founder Masayoshi Son is reorganizing the management team, with René Haas, CEO of chip design company Arm, expanding his responsibilities to oversee semiconductors, AI, and robotics businesses, driving the development of Softbank's proprietary AI chip project, "Project Izanagi". At the same time, Softbank is pursuing a capital alliance with Tokyo Electric Power Company to secure power supply and access low-carbon energy for AI data centers, strengthening its AI infrastructure layout.
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