Masayoshi Son Borrows ¥1 Trillion from Japanese Retail Investors to Continue Funding OpenAI

Dongzha Beating AI News Flash: SoftBank is set to issue a ¥1 trillion corporate bond to individual investors in Japan, approximately $6.3 billion, setting a record for individual-to-corporate bond issuance in Japan. The bond has a maturity of 7 years, with an indicative interest rate of 4.3% to 4.9%, in denominations of ¥1 million. The funds will be used for AI investments and debt repayment, with OpenAI being one of the largest recipients of the fund.

This marks SoftBank's third bond issuance to retail investors this year. In April and June, it raised ¥418 billion and ¥260 billion, respectively. SoftBank had previously pledged $30 billion in additional investment in OpenAI, with the final $10 billion scheduled to be paid in October. Cumulatively, the investment will reach $64.6 billion, resulting in a 13% stake.

However, the ¥1 trillion raised is still insufficient. Bloomberg Intelligence analyst Sharon Chen estimates that even after this funding, SoftBank still faces a shortfall of over $20 billion, likely prompting further overseas bond issuance in the near future.

To entice individual investors, SoftBank is offering significantly higher rates. Currently, Japan's 5-year and 10-year government bond yields are around 2.13% and 2.88%, while this bond offers up to 4.9%. SoftBank expects to receive an A rating from Japan Credit Rating Agency (JCR), but S&P currently rates it at BB+, one notch below investment grade. Analysts note that banks find it more challenging to increase their exposure due to ratings, maturity, and their own funding pressures, making SoftBank increasingly reliant on individual investors.