SoftBank issuing $11 billion bonds to raise money for investment in OpenAI

Japan’s technology and investment institution SoftBank has planned to issue bonds of about $11 billion to raise the money of large investment in the artificial intelligence (AI) institution OpenAI. According to the plan, bonds of $10 billion will be issued in US currency and further bonds of 1 billion euros will be issued in European currency.

News agency Reuters has informed this information citing a term sheet published on Monday (September 21). It has been said in it that the tenures of the dollar-based bonds may be three and a half years, five and a half years and seven and a half years. And the tenure of the bonds issued in euros has been fixed at four and six years.

If the entire bond sale is completed according to the plan this will be the largest corporate bond sale among the non-financial institutions of Asia-Pacific and Japan. According to LSEG data, earlier Seven-Eleven had set this record by selling bonds of $10.93 billion in January 2021.

According to the information of Dealogic, the proposed bond sale of SoftBank may become one of the largest corporate bond transactions worldwide this year. Through this initiative the Japanese institution wants to collect the necessary money for further large investment in OpenAI.

A large part of the money obtained from the bond sale will be used in the next $10 billion investment of SoftBank in OpenAI. The payment of the money of the third phase of this investment is scheduled to be completed on October 1.

Earlier SoftBank had taken a short-term loan facility or bridge loan of $10 billion to raise the money of investment in OpenAI. It has been mentioned in the term sheet that the loan facility will be repaid and cancelled with the money obtained from the new bond issue. There is a plan of using the remaining money in the general corporate works of the institution.

There is a plan of determining the price of the proposed bonds on September 24 and settling the transaction on September 29. Fitch Ratings has given a BB-plus rating for the bonds.