SoftBank seeks record $40B loan to fund OpenAI
What's the story
SoftBank, the Japanese tech conglomerate, is seeking a loan of up to $40 billion. The move is mainly aimed at financing its massive $30 billion investment in US-based artificial intelligence (AI) company OpenAI. If successful, this would mark SoftBank's largest-ever borrowing transaction in dollars alone. The bridge loan would have a tenor of about 12 months and is being underwritten by four lenders including JPMorgan Chase & Co.
Market position
Loan underscores Son's AI ambitions
The potential loan highlights SoftBank founder Masayoshi Son's aggressive strategy to make his company a key player in the global AI boom. The $30 billion investment in OpenAI is on top of over $30 billion that SoftBank has already pumped into the start-up. This massive investment now forms the centerpiece of Son's ambitions and is reminiscent of his early bets on ByteDance Ltd. or Alibaba Group Holding Ltd., but at a much higher cost.
Financial strategy
Concerns mount over SoftBank's investments
To fund its increasing stake in OpenAI, SoftBank has sold assets like its stake in NVIDIA Corporation. The US company is now one of SoftBank's largest holdings, along with a nearly 90% stake in chip designer Arm Holdings Plc. However, the scale of SoftBank's investment and concerns about an AI bubble have raised eyebrows among market observers. This week, S&P Global Ratings lowered SoftBank's credit outlook due to fears that its OpenAI investments could hurt liquidity and asset quality.
Investment impact
Credit rating agency warns of risks
SoftBank Group's $30 billion bet on OpenAI is a further drag on its credit profile, as it has little room under S&P's 35% adjusted loan-to-value (LTV) limit. The company has been using debt and asset sales to fund over $70 billion of AI investments since 2025, leaving it with a huge debt burden and deteriorating portfolio quality. An uncertain macroeconomic environment and fears of an AI bubble could threaten SoftBank's LTV and timing of OpenAI listing, an important positive catalyst.