Masayoshi Son, founder and current CEO of Japanese conglomerate SoftBank, announced that SoftBank Group has added $450 million to an existing credit line, increasing the total capacity to $6.5 billion, according to people familiar with the matter. The move comes at a time when SoftBank is investing heavily in OpenAI, making the additional amount relatively small compared to its other financial commitments.
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The previous $6.05 billion credit line was set to expire this month, and the extended line gives SoftBank an extra year to draw down on it. More than 20 banks are participating in the deal, which carries a 210 basis point spread over the Secured Overnight Financing Rate (SOFR). SOFR is an interest rate widely used in the United States as a benchmark for loans and financing agreements, replacing LIBOR as more reliable and transparent.
It remains unclear whether SoftBank has drawn on the line or plans to do so, as a company spokesman declined to comment. The report is based on sources who requested anonymity because of the private nature of the deal. Commitment lines like this are revolving facilities that lenders keep available for a set period. Borrowers often view them as liquidity insurance rather than a source of funding, and may not draw on them at all.
SoftBank’s other financial commitments, however, are significant. The company pledged an additional $30 billion to OpenAI in February, to be paid in three $10 billion installments, with the final payment due on Oct. 1. That brings SoftBank’s total investment in OpenAI to $64.6 billion, at a yield of about 13% on a pre-cash valuation of $730 billion, the company said at the time.
Initial financing is expected to come from bridge loans, which are short-term loans used to cover immediate financing needs until longer-term financing is secured.
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There could be further developments, as SoftBank has met with fixed-income investors in New York to gauge interest in a potential $10 billion to $20 billion in high-yield bonds. Reports suggest a deal could be announced as early as next week, though the company described those meetings as non-deal and said no decisions have been made about the bond issue. The remaining $10 billion of the bridge loan could be drawn in early October.
The context for these financial moves is a market that has become increasingly wary of debt-financed AI initiatives, particularly with OpenAI’s own IPO delayed due to security concerns. The cost of insuring SoftBank’s debt against default hit a three-year high earlier this week. This highlights growing investor concern about the company’s ability to meet its financial obligations, especially at a time when markets are volatile and investments in AI technology face heightened uncertainty.
While the waiting line may never be used, it represents a significant decision made by Masayoshi Son this month, and the timing appears to be strategic. SoftBank, with its history of investing heavily in technology companies, continues to pursue strategies that strengthen its market position despite the challenges and uncertainties it faces.
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Its ability to manage these challenges will be critical to its future success and its ability to remain at the forefront of technological innovation.
