SoftBank seeks another $10 billion loan to invest in OpenAI to “borrow the new and return the old”

The Zhitong Finance App learned that according to people familiar with the matter, SoftBank Group (SFTBY.US) is seeking a loan of 10 billion US dollars to raise more capital to refinance the debt generated by its investment in US tech giant OpenAI.

The person who requested anonymity due to undisclosed information mentioned above said that the interest rate fluctuation for this two-year loan is expected to add about 275 basis points to the Guaranteed Overnight Financing Interest Rate (SOFR), and Mizuho Bank is the lead arranger and bookkeeper for the loan.

If this loan is implemented, it will further expand a series of debt financing activities recently carried out by SoftBank around OpenAI investments. Despite growing market concerns about credit risk in the field of artificial intelligence (AI), SoftBank is still advancing a number of financing plans, including a possible issuance of up to $20 billion in bonds. SoftBank, founded and led by billionaire Sun Zhengyi, is expected to invest nearly $65 billion in OpenAI by October this year.

People familiar with the matter said that part of the loan proceeds may be used to repay the $40 billion bridge loan raised earlier this year to invest in OpenAI. The source added that the loan commitment deadline is August 31, and banks are already discussing participation matters.

At the same time, SoftBank is also considering raising further capital through the bond market. According to reports, the company is considering issuing bonds of 10 billion to 20 billion US dollars to help refinance these bridge loans; at the same time, it is also planning to issue a record 1 trillion yen (about 6.3 billion US dollars) of retail bonds in the Japanese domestic market to support its investment commitment to OpenAI.

At the beginning of this month, SoftBank obtained another $10 billion loan secured by its OpenAI shares. The loan comes with contractual terms that may require additional cash collateral or early repayment.

Both SoftBank and Mizuho Bank declined to comment on the matter.

At a time when SoftBank is making big money, US tech companies are planning to invest trillions of dollars in data centers and other AI infrastructure over the next few years. Compiled data shows that this year alone, companies have raised more than 410 billion US dollars for such facilities and other AI-related investments through the bond market.