SoftBank's Record Short Book Meets Its Heaviest Borrowing Test

Short interest hits 2.27% of float, a $3.9 billion record, as SoftBank plans a dollar junk bond to fund AI after a $40 billion bridge loan.

SoftBank Group is drawing unusual attention on two fronts at once. The stock has been climbing hard, and the investors who bet against it are now sitting on the kind of losses that tend to feed on themselves. At the same time, the Japanese conglomerate is preparing to ask creditors for a fresh pile of cash to keep financing its artificial intelligence ambitions.

The scale of the bearish positioning is the part that stands out. Short interest as a share of the freely tradable float reached 2.27% by Wednesday, according to Bloomberg — the highest level since July 2025. In nominal terms, those short positions add up to $3.9 billion, a record at least since early 2015. Bloomberg has floated the idea that a forced unwind of these bets could push the shares even higher.

That dynamic is not accidental. It is the byproduct of a wager SoftBank itself has made in size, having channeled tens of billions of dollars into AI companies and levered up its balance sheet to do it. A $40 billion bridge loan taken out this year helped fund the investments tied to OpenAI. Now the group is hunting for longer-term replacement financing.

A rally with a mechanical engine

The equity has been on a tear. Thursday's close came in at EUR 36.70, and the stock was trading at EUR 37.47 on Friday, a gain of 2.1% on the day. Over seven sessions the advance totals 23%, and across 30 days it reaches 22%. Anyone who positioned for a pullback during that stretch is now nursing substantial paper losses — which is precisely what fuels speculation that forced covering could add further momentum.

The scenario is plausible rather than alarmist: a short book this large, against a rising share price, almost automatically creates buying pressure the moment the first positions start to close. Yet the squeeze thesis alone does not explain why SoftBank is enjoying so much goodwill right now.

The market's nerves are visible in the technicals. The RSI sits at 71.2, signaling an overbought condition, while annualized volatility of 62% shows just how jittery trading has become. The market capitalization of roughly EUR 209.09 billion now carries a bet whose outcome hinges largely on whether lenders in September are willing to bankroll SoftBank's AI ambitions — at a price that reflects the group's weaker credit standing.

From bridge loan to junk bond

That credit standing is the crux. SoftBank carries a BB+ rating from S&P Global Ratings, the top rung of speculative-grade territory — but speculative nonetheless. Japanese media reports draw the contrast sharply: Alphabet sits at AA+, Amazon at AA. Several rating notches of creditworthiness separate SoftBank from the tech heavyweights it is racing against in AI.

Fresh debt is how the group intends to close that gap. After pricing a retail bond worth over one trillion yen late last week — equivalent to $6.3 billion, with a 4.75% coupon — the next step is a dollar-denominated junk bond. CFO Yoshimitsu Goto and other executives will meet investors from September 14 to 17 at Citigroup's offices to gauge appetite. Media reports suggest SoftBank could raise between $10 billion and $20 billion, potentially supplemented by a euro tranche.

The arithmetic behind the borrowing is striking. Bloomberg Intelligence analyst Sharon Chen has laid it out: gross debt could climb from around $80 billion in March 2025 to more than $130 billion if SoftBank funds its upcoming investments with debt as planned.

Robots, and one small delay

Alongside the financing push, SoftBank is in talks to take a majority stake in humanoid robot developer 1X Technologies, at a valuation of roughly $6 billion. The detail worth noting: OpenAI, in which SoftBank itself holds a stake, had also shown interest in 1X before shelving those plans. Stepping in where a portfolio company walks away reads as a statement of confidence — a bet on the physical layer of AI, robotics, rather than on the software story alone.

Not everything is running smoothly. The capital increase at LINE MAN CORPORATION, worth $130 million and originally planned for earlier, is slipping to the end of October, with coordination needs between the contracting parties cited as the reason. A minor setback that does not alter the broader trajectory.

The verdict due in New York

What emerges is a company pushing its chips onto the table for an AI future — and getting surprisingly strong backing from capital markets in return. The combination of squeeze mechanics, a multi-billion-dollar bond roadshow and another strategic acquisition in robotics tells a coherent story, but the volatility of this stock remains elevated.

For those with the stomach to ride out the swings, the coming bond week in New York is the next real test. If the market shows up for the junk-bond sale, the current narrative likely gets another endorsement. If it does not, the euphoria could lose its substance in a hurry.