SoftBank Issues Record-Breaking JPY 1 Trillion Retail Bond for AI Ambitions
SoftBank Group has issued retail bonds worth JPY 1 trillion with a coupon rate of 4.75%, making it the largest single retail corporate bond issuance in Japanese history. The high-yielding bonds, which will be used to fund SoftBank's AI ambitions, come as Japan's 10-year government bond yield broke through the 3% threshold for the first time in nearly three decades.
The coupon rate of 4.75% is significantly higher than the average 2.3% seen in JPY-denominated retail corporate bonds issued this year, reflecting investors' demand for higher returns to compensate for SoftBank's leverage and AI investment risks.
Kazuma Ogino, Senior Credit Analyst at Nomura Securities, noted that the yield level and issuance size may attract new individual investors to the Japanese corporate bond market. Retail investors who hold bonds to maturity are less affected by interim price fluctuations while benefiting from higher yields, described as a 'tailwind' for the retail bond market.
The trillion-yen bond issuance aligns with SoftBank's strategic shift towards building a full-stack platform for Artificial Super Intelligence (ASI), which aims to capture multi-layered profit pools across chip IP, server processors, data center energy, compute leasing, and model applications. However, the high coupon rate also indicates that SoftBank must rely on higher returns from its AI assets to cover its cost of capital.