(Bloomberg) — SoftBank Group Corp. raised about $1.86 billion through bond sales in dollars and euros, in one of the biggest foreign currency deals by a Japanese company this year, as the technology company moves to expand investment in intelligence artificial.
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In its first yen-free debt offering since 2021, billionaire Masayoshi Son’s company priced two tranches in dollars, totaling $900 million, and two tranches in euros, raising €900 million ($964 million), according to the company. SoftBank said the funds will be used to pay off debt and finance operations. Its shares also rose on optimism regarding AI investments.
SoftBank joins bond bonanza from issuers in Asia and elsewhere, including even bigger deals from other Japanese borrowers such as Takeda Pharmaceutical Co. and Rakuten Group Inc. Bank of Japan is likely to raise rates further this year, from the lowest levels. Japanese companies are increasing external debt agreements because the large size of markets like the US allow for more borrowing, including through high-risk notes.
“Bond investors are pumping money into SoftBank Group in anticipation of future growth potential in AI-related areas,” said Takashi Nakagawa, senior credit analyst at Tokai Tokyo Intelligence Laboratory Co. earlier this year.”
SoftBank and its founder Son have recently made major investments in AI that underscore expectations that it will accelerate its pace of activity in this area. The Japanese company this year directly invested US$200 million in Tempus AI Inc., a startup that analyzes medical data for doctors and patients to find better treatments. More recently, it backed Perplexity AI at a $3 billion valuation, betting on a company that wants to use AI to compete with Alphabet Inc.’s Google search.
Longer term, SoftBank is working on a plan to deploy about $100 billion in AI-related chips in a project called Izanagi, Bloomberg News reported in February.
SoftBank, with a BB+ rating from S&P Global Ratings, priced $400 million in five-year dollar bonds with a coupon of 6.75% in one of its tranches. That compares with 2029 notes sold in April by domestic rival Rakuten Group Inc., which S&P rates one notch below the BB: Debt was yielding about 8.9% in Tokyo on Friday, data compiled by Bloomberg show .
SoftBank shares, in turn, rose up to 3.5% on Friday. Tokai Tokyo raised its price target for the company from ¥9,750 to 12,000 yen, based on expectations that its investments in AI will increase its net asset value next year, Nakagawa said.
–With assistance from Min Jeong Lee.
(Adds other major Japanese issuers of foreign currency bonds in third paragraph and bond details throughout.)
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