SoftBank is raising $11 billion to fund investments in OpenAI.

SoftBank Group has launched a bond issuance totaling $11 billion to fund investments in OpenAI.

The company plans to issue $10 billion in dollar-denominated bonds and €1 billion in euro-denominated bonds, which is equivalent to approximately $1.15 billion.

The dollar-denominated bonds will have maturities of 3.5, 5.5, and 7.5 years. The euro-denominated bonds are set for four and six years.

If the issuance proceeds at the stated volume, it will become the largest corporate bond deal by a non-financial company in the Asia-Pacific region and Japan. According to LSEG, SoftBank will surpass the previous record set by 7-Eleven, which issued bonds worth $10.93 billion in January 2021.

The proceeds from the issuance will be used to pay $10 billion as part of the third tranche of additional investments by SoftBank in OpenAI. The deal closure is expected on October 1. The remaining funds are intended for general corporate purposes.

Previously, SoftBank secured a $10 billion credit line to finance its investments in OpenAI. Under the terms of the deal, the new bond issuance will replace this interim financing.

The bond issuance is expected on September 24, with settlement on September 29.

Fitch Ratings has assigned a BB+ rating to the planned bonds. The agency expects SoftBank’s debt burden to increase as it funds the announced investments, but believes the company will maintain sufficient liquidity and access to capital markets.

SoftBank and OpenAI continue to expand their collaboration in artificial intelligence as part of the deal. The new bond issuance will be part of the financing for further investments by the Japanese group in OpenAI.

Source: reuters.com