SoftBank Seeks Green Light on $10-20 Billion Junk Bond Deal

SoftBank is set to visit New York next week to gauge investor appetite for a US dollar junk bond, potentially paving the way for $10-20 billion in borrowing. The Japanese tech investment firm has arranged market soundings with Citigroup and other big banks, which will help determine the price it would need to pay for the debt.

A junk bond is high-risk debt issued by companies with lower credit ratings, typically requiring higher interest rates to compensate investors for the added risk. For SoftBank, tapping into this market could provide a large influx of cash without selling assets quickly, but it would also increase its interest costs at a time when lenders are being cautious about taking on more risk.

The size of the potential deal is significant enough that it will test the market's capacity to absorb high-yield debt. If investors demand a high premium for buying a new bond rather than an existing one, it could push up interest rates for other similar borrowers and make their deals harder to sell.