SoftBank Group plans to issue bonds worth 1 trillion yen targeting retail investors, Bloomberg reported Monday. The offering would be the largest corporate bond issuance aimed at individual investors in Japanese history.
According to a corporate filing, the bonds will carry a seven-year maturity, with the issue price to be set on Sept. 4. The expected interest rate is in the range of 4.3 to 4.9 percent.
SoftBank has committed to investing more than $60 billion in OpenAI and has been accelerating investment in data centers to expand computing capacity. The proceeds from this bond offering are expected to fund those efforts.
"SoftBank expects retail investors to buy these bonds if it offers an attractive yield," said Yuki Fukumoto, a senior researcher at NLI Research Institute. "The company appears confident there will be demand at a time when there are few fixed-income products that can beat inflation."
Fukumoto added that banks would likely find it difficult to take on the risk given slowing deposit growth, the bonds' below-investment-grade credit rating and the seven-year maturity, meaning the offering would rely more heavily on retail investors.
This is SoftBank's third retail bond issuance this year. The company raised 418 billion yen in April and 260 billion yen in June.
Sharon Chen, a credit analyst at Bloomberg Intelligence, expects the bond's coupon to price near the top of the 4.3 to 4.9 percent range. She said SoftBank would likely still face a funding shortfall of more than $20 billion after the offering, making it probable the company would issue additional overseas bonds in the near term.
S&P Global Ratings revised its outlook on SoftBank to "stable" from "negative" on July 16, while maintaining the company's long-term credit rating at BB+, one notch below investment grade.
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