AI financing concerns rise, SoftBank credit risk climbs to near four-year high

BlockBeats news, October 20 - According to Bloomberg, as market concerns over AI-related financing and potential large-scale acquisitions heat up, SoftBank Group's 5-year credit default swap (CDS) spread rose to 432 basis points on Tuesday, the highest since early November 2022, widening by more than 30 basis points from when it breached 400 basis points a week earlier.

CoreWeave's financial pressure has drawn attention to the debt issues behind the AI investment boom. Amid rising financing costs, SoftBank is also considering the acquisition of Allied Universal, with its funding needs and leverage levels coming under scrutiny.

Bloomberg Intelligence credit analyst Sharon Chen expects SoftBank to see at least $6 billion in cash outflows in the fiscal year ending March 2027, with further AI investments adding to financing needs. She said SoftBank needs to raise new funds for potential acquisitions, and its loan-to-value ratio may approach its self-imposed 25% ceiling. SoftBank's stock price has been weak recently, down about 50% from its June high.