What happened
Apollo Global Management is in talks to boost a NAV loan to SoftBank's Vision Fund 2 to $9 billion, from $5.4 billion, to help finance SoftBank's OpenAI investment; terms aren't final.
Why it matters
SoftBank's AI push is increasingly debt-funded, and the cost of insuring its debt against credit risks has risen, with credit-default swaps hitting a three-year high this week.
What to watch
The increase is not finalized, and the backdrop is a broader flareup of concerns about AI safety that is weighing on SoftBank's credit. SoftBank is also holding investor meetings in New York about a possible overseas junk bond sale that could raise $10 billion to $20 billion.
WHO IT HITSThis lands on SoftBank's lenders and bond investors, who are pricing more risk into the company's debt as it leans on borrowed money to fund AI bets. It also matters to Apollo and other private-credit firms weighing NAV loans against fund assets.
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Apollo first made this net-asset-value loan to SoftBank's venture capital fund in 2021 and added $900 million last year to reach $5.4 billion. The new talks would expand it further, showing how SoftBank is reusing fund assets to raise cash for its AI push.
That push now centers heavily on OpenAI. SoftBank has committed $64.6 billion to the ChatGPT creator, and its Vision Fund 2 counts Masayoshi Son and SoftBank itself as the largest investors. The fund has made more than 300 investments since inception and has recently been directing more money toward OpenAI.
What happens next likely hinges on whether the loan increase is finalized, and on how credit markets treat SoftBank's broader borrowing. Its credit-default swaps rose this week to a three-year high amid wider concerns about AI safety, and a potential overseas junk bond sale could raise $10 billion to $20 billion. Investors pricing that risk will determine how much SoftBank's AI ambitions cost to finance.
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