Softbank (SFTBY.US) accelerates cross-border fundraising: subsidiaries issue euro bonds to expand channels, parent company increases yen bonds to cope with AI expansion.

SoftBank Corp., a subsidiary of SoftBank Group (SFTBY.US) engaged in mobile communications business, launched its first Eurobond issuance on April 10 (Friday). In terms of the issuance structure, SoftBank Corp. introduced Euro-denominated senior unsecured bonds consisting of two parts: a 6-year tranche and a 10-year tranche. According to sources, the pricing spread of the 6-year bonds is approximately 135 to 140 basis points higher than the mid-swap rate, while the 10-year bonds, due to their longer term, carry a spread premium of 170 basis points. The issuance has received cautious approval from leading international rating agencies, with S&P Global Ratings proposing a "BBB" rating and Fitch Ratings proposing a "BBB+" rating for SoftBank Corp. S&P has set the upper limit of SoftBank Corp.'s rating two notches above its parent company's rating. CreditSights stated that a rating downgrade is "unlikely to occur at least until the likely IPO of OpenAI." The issuance is jointly managed by J.P. Morgan, BNP Paribas, Citigroup, and SMBC Nikko, and is expected to be priced later today. To ensure a smooth issuance process, the company has appointed the aforementioned top international banks and has been conducting investor meetings in Asia and Europe since April 8. The Eurobond issuance comes at a time of significant financial strategy shift within the SoftBank Group. The parent company is currently seeking to raise up to $40 billion in loans from the loan market, which could be its largest-ever U.S. dollar borrowing, aimed at providing further funding support for its significant holdings in core AI assets such as OpenAI. However, this aggressive investment shift has raised concerns in the capital markets, with S&P recently revising SoftBank Group's credit outlook to "negative." The reason being the group's excessive exposure to risks related to AI assets like OpenAI and Arm, with the proportion of non-public assets in the investment portfolio expected to exceed 50%. Since the beginning of the year, SoftBank Group's stock has fallen by approximately 14%, underperforming the overall market; its credit default swaps (a key indicator of default risk) have widened by about 20%. Previously, the parent company issued a 418 billion (approximately $26 billion) hybrid bond to retail investors, with an initial coupon rate of 4.97% for five years, setting a new high for similar bond issuances by the company. This 35-year subordinated note issuance is essentially a defensive strategy by the parent company in the institutional market backdrop of soaring risk premiums, turning to the mass retail market to extend debt maturity at a high premium. This move aims to provide repayment funds for existing debt maturing in 2026 and alleviate liquidity pressures caused by massive investments in OpenAI and the "Interstellar Gate" data center project. Despite facing rating pressures, SoftBank Corp., as a cash flow-stable telecom entity, has shown relative independence and strength in the market. In 2025, when SoftBank Corp. first entered the U.S. bond market, it achieved a subscription multiple of over 7 times, demonstrating international investors' confidence in its fundamentals. This symbiotic financing model reveals the high reliance of the SoftBank ecosystem on surplus credit from subsidiaries to hedge risks for the parent company's aggressive investments. Through the overseas debut performance of its subsidiaries in the capital markets, SoftBank aims to demonstrate its group's ability to mobilize financing globally, even in times of rating pressures on the parent company. However, this seemingly complementary financing structure harbors deep financial contagion risks and credit constraints. According to S&P Global Ratings, SoftBank Corp.'s credit quality is not entirely independent, with its rating ceiling strictly limited to two notches above the parent company, meaning that while the subsidiary benefits from stable telecom business profits, it is also capped by the parent company's aggressive AI investment exposure. With SoftBank Group's CDS spreads recently widening by about 20%, concerns about the parent company's investment risks dragging down subsidiary credit levels are growing in the market. If SoftBank's massive investments in AI fail to achieve financial exits as scheduled through IPOs or other means, the heavy interest debt pressure on the parent company could trigger a chain reaction, leading to downward pressure on subsidiary credit ratings and increasing the overall group's comprehensive financing costs. From a long-term perspective, SoftBank's current capital operations are in a delicate balance. On one hand, founder Masayoshi Son is trying to build an AI ecosystem at the operational level through restructuring management teams, coordinating Arm's semiconductor and Siasun Robot & Automation businesses, and collaborating with Tokyo Electric Power Company to secure AI data center power supply; on the other hand, high-interest financing and cross-currency fundraising at the financial level are buying time for these visions. This high-stakes gamble of "buying time with space" makes SoftBank Corp.'s inaugural Eurobond issuance not only a simple debt financing move but also a key barometer for evaluating international investors' confidence in SoftBank's AI transformation and observing whether the parent-subsidiary credit firewall is stable.