SoftBank's Debt-Fueled Ambitions Span AI and Energy

SoftBank finalizes a ¥418B hybrid bond and eyes $40B more to finance its OpenAI commitment and a potential $6.3B investment in Japan's TEPCO, drawing a negative outlook from S&P.

SoftBank Group is tapping global debt markets with unprecedented scale, finalizing a ¥418 billion (€2.6 billion) hybrid bond while its subsidiary, SoftBank Corp., prepares its inaugural euro-denominated offering. This aggressive fundraising push is fueling two colossal strategic bets: a massive commitment to OpenAI and a potential multi-billion dollar entry into Japan's power sector.

The group is simultaneously exploring borrowing up to $40 billion, primarily to finance its OpenAI engagement, which would mark its largest-ever dollar credit raise. This ambition has not gone unnoticed by rating agencies. S&P Global Ratings recently revised its outlook on SoftBank Group to negative, citing increased risks from the OpenAI exposure and the group's growing financing needs.

Beyond artificial intelligence, SoftBank Corp. has joined forces with investment giants Blackstone and Apollo Global Management to bid for a stake in Tokyo Electric Power Company Holdings (TEPCO). Reports suggest the investment could exceed $6.3 billion. TEPCO is seeking partners to manage rising electricity demand from AI data centers and to decarbonize its energy sources, with a selection process expected to take about a year. For SoftBank, securing reliable power capacity is a logical strategic move for anyone aiming to operate large-scale AI infrastructure.

The finalized yen hybrid bond, rated BBB+ by the Japan Credit Rating Agency, is a 35-year subordinated note aimed mainly at Japanese retail investors. It carries a fixed annual coupon of 4.97% for the first five years, after which it switches to a variable rate based on the one-year Japanese government bond yield plus a 3.133% spread, including a step-up clause. The subscription period runs from April 13 to 21, 2026, with issuance set for April 22. SoftBank can call the bonds at any interest payment date from April 2031 onward. The proceeds will primarily refinance existing hybrid notes reaching their first optional redemption date in June 2026.

On a parallel track, SoftBank Corp. has mandated JPMorgan Chase, BNP Paribas, Citigroup, and Mizuho to arrange investor meetings for its first euro bond. The planned issuance consists of fixed-rate, unsecured tranches with six- and ten-year maturities, expected to be rated BBB and BBB+ by S&P and Fitch, respectively. This follows a successful $1 billion US dollar bond last year that was oversubscribed sevenfold.

The financial pressure is mounting at the corporate level. Analysts note that SoftBank pays billions annually to OpenAI for services in Japan, while payments to Arm constitute a significant portion of that chip designer's quarterly revenue. Consequently, fluctuations in OpenAI's private valuation could ripple through the entire SoftBank ecosystem.

Investors have reacted cautiously to the scale of these commitments, with the stock showing slight losses on the news. Clearer insight into the balance sheet impact will come with the full-year results for the period ending March 31, 2026. SoftBank Corp. is scheduled to report on May 11, followed by the parent company on May 13.