SoftBank intends to raise over $11 billion through high-risk junk bonds to cover a further payment for its holding in OpenAI. The Financial Times reports that investor documents confirm the plan involves $10 billion in dollars and 1 billion euros. Most major technology companies have recently issued safer debt instruments, yet this Japanese firm faces a higher probability that lenders will not recover their capital. Terms for the issuance are scheduled to be finalised this Thursday, with the cash transfer to OpenAI due in October.
The company had previously arranged short-term loans of up to $40 billion for the same purpose. This shift to longer-term borrowing could temporarily push SoftBank past its own debt ceiling. OpenAI is projected to burn through nearly $280 billion in cash by the end of 2030, according to the report. SoftBank’s data centre business also relies on revenue from these OpenAI contracts.
* The debt swap converts existing short-term obligations into longer-term liabilities.
* OpenAI expects significant cash expenditure through 2030.
* SoftBank’s future revenue depends heavily on the OpenAI partnership.
