(April 10): SoftBank Corp is selling its debut euro-denominated bond on Friday, with investors focused on risks stemming from its parent company’s aggressive push into artificial intelligence.
The mobile unit of Japanese conglomerate SoftBank Group Corp is selling euro-benchmark sized bonds with long six- and 10-year maturities, according to people familiar with the matter. The deal has pulled in more than €4.2 billion of investor bids across the tranches.
With the demand, the firm cut pricing by about 30 basis points on each bond, with the €500 million June 2032 tranche is now offered around 105 basis points above mid-swaps, while the benchmark sized June 2036 portion was lowered to around 140 basis points above.
SoftBank Corp’s relatively stable position in Japan’s concentrated telecoms market offers support for the credit, though investors remain focused on risks tied to its parent company, wrote CreditSights analysts led by Mark Chapman. “Risk associated with its parent is a key focus for Softbank Corp creditors.”
SoftBank Group has ramped up investment in artificial intelligence, including plans to finance a stake in OpenAI. The conglomerate is exploring raising as much as US$40 billion in the loan market, which would mark its largest-ever dollar borrowing.
The increased spending has drawn scrutiny from ratings firms. S&P Global Ratings recently revised its outlook on SoftBank Group to negative, citing risks tied to its growing exposure to OpenAI and broader funding pressures.
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The company’s shares have fallen about 14% this year, underperforming the broader market, while its credit default swaps — a gauge of default risk — have widened roughly 20%.
The parent company priced ¥418 billion (US$2.6 billion) of hybrid bonds targeting retail investors at an initial five-year coupon of 4.97%, marking the highest level for such debt issued by the corporate.
S&P caps SoftBank Corp’s rating at two notches above its parent, and CreditSights said a downgrade is unlikely “at least as long as an OpenAI IPO remains a fairly near-term possibility.”
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SoftBank Corp’s euro bonds are expected to be rated BBB by S&P and BBB+ by Fitch Ratings.
The sale is being managed by JPMorgan Chase & Co, BNP Paribas SA, Citigroup Inc, and Mizuho, and is expected to price later on Friday.
Uploaded by Evelyn Chan
