(Sept 23): Billionaire Masayoshi Son’s SoftBank Group Corp kicked off what’s set to be one of the largest corporate junk bond sales ever as the Japanese conglomerate offers record yields to entice investors into helping fund its unprecedented investments in artificial intelligence (AI).

One of the world’s biggest investors in AI, SoftBank started marketing the multi-part deal, with price talk underway, according to people familiar with the matter who asked not to be identified as the discussions are private. The group aims to raise the equivalent of more than US$11 billion (RM44.83 billion) in the offering that includes a US$10 billion dollar part and a €1 billion (US$1.1 billion or RM4.67 billion) euro portion.

The deal is the latest in a flurry of activity by SoftBank in debt markets this year to help fund commitments nearing US$65 billion to ChatGPT creator OpenAI, as well as more M&A in the sector. The moves have put the Japanese investment firm at the epicentre of debt-fuelled bets on artificial intelligence, at a time when the promise of the technology has riveted global markets even as safety concerns about the industry have flared.

SoftBank is offering record yields in the junk debt sale, though those figures could change by the time the deal actually prices.

The conglomerate is marketing US$1 billion of 3.5-year bonds to yield 8.75% to 8.875%, US$4.5 billion of 5.5-year securities at 9.375% to 9.5% and the same amount of 7.5-year notes at 9.75% to 9.875%, the person said. Those would be the highest-ever levels for SoftBank dollar bonds of those maturities, according to data compiled by Bloomberg.

As of late afternoon Wednesday in Asia, the order book for the dollar part of the deal had exceeded US$30 billion, people familiar with the matter said.

For the euro portion, SoftBank is marketing four-year notes at a yield of around 7.5%, and six-year securities at 8.25% to 8.5%. That would be at or near a record for the first part and a record for the longer tranche.

The group isn’t alone in storming markets for funding, with global AI-related debt issuance already topping US$575 billion in 2026, according to a recent report by Goldman Sachs Group Inc credit strategists.

Son has downplayed concerns about investments in AI infrastructure, and said earlier this year he expects AI-related industries to account for 20% of global output by 2040, equivalent to US$46 trillion.

The flood of AI funding in global financial markets, however, has made some bond investors uneasy. Their concern is that the ever-growing pile of the debt threatens to cause a hangover for markets if the technology fails to pay off for the firms that are making the biggest investments. 

With price talk for the shortest SoftBank tranche of 3.5 years starting at 8.75% to 8.875%, if the company ended up paying within that range it would be closer to the average market yield of 8.5% on B- rated notes in the US market, several levels below the Japanese company’s own rating of BB+, the highest speculative-grade score from S&P, according to data compiled by Bloomberg.

Broadly, the average yield on dollar bonds rated in the B zone is 7.5% and 6.55% for those rated in the BB area, Bloomberg indices show.

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