Market worries about the feasibility of the "Stargate" artificial intelligence infrastructure project, in which Softbank Group Corp is involved, have intensified, leading to a widening of the Japanese conglomerate's credit default swap spreads and a sharp decline in its stock price. According to a trader, as of 9:30 AM local time on Monday, the spread on Softbank's five-year CDS was quoted at approximately 380 basis points, compared to around 347 basis points at the end of the previous week. This development triggered a steep drop in the company's share price, which fell as much as 12.5% to its lowest level since August 2025.
Concerns over Softbank Group's aggressive AI investment strategy have heightened following the cancellation of an expansion plan for an AI data center linked to the "Stargate" initiative. Given the company's reported plans to invest an additional $30 billion in OpenAI, along with other substantial AI project commitments, worries have resurfaced regarding its asset liquidity, financial flexibility, and the potential for a ratings adjustment. A credit rating downgrade could lead to higher financing costs, particularly in the bond market.
In a related development, Oracle Corp and OpenAI have abandoned plans to expand a flagship AI data center in Texas, citing prolonged financing negotiations and shifts in demand patterns. This expansion was intended to be a key component of the broader "Stargate" project. Similarly, S&P Global Ratings revised Softbank Group's outlook to negative on March 3, citing the company's planned additional investment in OpenAI.
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