SoftBank announced it will borrow more than $11 billion through risky bonds to fund another payment for its stake in OpenAI. The move comes as the Japanese company seeks to refinance short-term loans of up to $40 billion into longer-term debt.
The bonds, valued at $10 billion and 1 billion euros, are expected to be finalized by Thursday, with the payment to OpenAI due in October. These are known as junk bonds, which offer higher returns but also carry a greater risk of default.
SoftBank's decision to issue risky bonds contrasts with most other major tech firms, which have opted for safer bond offerings recently. The Financial Times reports that the company's data center business is also relying on its OpenAI contracts for future revenue.
"SoftBank is making a strategic move to secure long-term financing for its OpenAI investment," said a spokesperson. The company aims to manage its debt obligations while supporting its stake in the AI firm.
The announcement follows OpenAI's forecast that it will burn through nearly $280 billion in cash by the end of 2030, according to the Financial Times. SoftBank did not specify its exact investment terms, and the company faces uncertainty about the long-term viability of its OpenAI stake.
Source: thedecoder
