SoftBank is back at the retail well. The Japanese conglomerate plans to sell ¥1 trillion (about $6.3 billion) in bonds to individual investors in Japan, which would set a record for Japan's retail corporate bond market. The seven-year bonds will carry an interest rate of 4.3% to 4.9%, and the money is earmarked for big-ticket investments — most notably OpenAI — as well as refinancing the bridge loans SoftBank already took on for those bets.
This will be SoftBank's third retail bond sale this year. It raised ¥418 billion in April and ¥260 billion in June. Of the $30 billion it promised as additional OpenAI investment, $20 billion has already landed, and the final $10 billion is due in October. When that's done, SoftBank's total OpenAI investment will reach $64.6 billion, giving it a roughly 13% stake.
But ¥1 trillion isn't nearly enough. Bloomberg Intelligence analyst Sharon Chen estimates that even after this issuance lands, SoftBank will still need more than $20 billion to fill the gap, and will probably keep tapping overseas bond markets in the near term.
To get retail investors to bite, SoftBank is offering a yield that looks generous by Japanese standards. Japan's 5-year and 10-year government bonds are yielding around 2.13% and 2.88%, respectively; this new bond offers up to 4.9%. SoftBank says it expects a Japanese JCR rating of A, though S&P still rates it BB+ — one notch below investment grade. With banks running out of room to increase exposure, SoftBank is increasingly turning to individual investors.