SoftBank to borrow $11 billion in junk bonds for OpenAI stake

SoftBank's move comes after it had already lined up short-term loans of up to $40 billion for OpenAI. Now the Japanese company wants to convert that short-term exposure into longer-term debt, and it is doing so through junk bonds rather than the safer instruments most other big tech firms have recently used. The Financial Times, citing investor documents, reports the offering splits into $10 billion and 1 billion euros, with terms expected to be set Thursday and the OpenAI payment due in October.

The stakes for SoftBank extend beyond a single payment. The company's data center business is also counting on its OpenAI contracts for future revenue, so its ability to keep servicing this debt is tied to those contracts continuing to perform. OpenAI, meanwhile, expects to burn through nearly $280 billion in cash by the end of 2030, according to the FT — a figure that underlines how much capital its backers are being asked to supply over time.

What the outcome hinges on is whether investors accept the risk of junk bonds at a price SoftBank can afford, and whether the company can swap its short-term loans for longer-term debt without breaching its own debt ceiling for an extended period. For SoftBank, the test is whether longer maturities buy it enough breathing room until its OpenAI-linked revenue materializes; for OpenAI, it is whether its funding pipeline holds as its cash needs mount.