SoftBank pays up to 9.75% to turn its OpenAI equity bet into bondholder risk

SoftBank has raised more than $11bn in bonds to fund the next tranche of its OpenAI investment. The sale—$10bn in dollars plus about €1bn—became the largest junk-bond offering on record, according to the Financial Times. Some tranches paid yields as high as 9.75%.

Most of the proceeds are intended for a $10bn OpenAI payment due around October 1 and to replace a bridge loan. The dollar bonds span 3.5, 5.5 and 7.5 years; Fitch rated the proposed notes BB+, one notch below investment grade. SoftBank therefore converts an illiquid equity position in a private AI company into fixed obligations owed to public credit investors.

The structure works if OpenAI’s value rises fast enough and eventually becomes realisable through an IPO, secondary sale or asset-backed financing. It becomes uncomfortable if the laboratory keeps consuming cash, delays a listing or raises new capital on terms that dilute SoftBank. A 9.75% yield compounds quickly: the investment must outperform not just its purchase price but the financing cost and refinancing risk.

Strong demand for the bonds is evidence that markets will still fund the AI trade, not that they regard it as safe. Arm’s share-price gains and SoftBank’s other holdings provide collateral comfort, while the OpenAI stake supplies the upside story. The record size also broadens who bears the consequence of that story failing. OpenAI’s funding requirements now reach beyond venture and strategic investors into the global speculative-grade debt market.