SoftBank plans to raise $40 billion to heavily invest in OpenAI, S&P warns of liquidity risk

According to Bloomberg, Japan’s SoftBank Group is seeking up to $40 billion in bridge loans to expand its presence in the artificial intelligence (AI) sector, aimed at funding its investment in OpenAI. If the deal goes through smoothly, this is expected to be the largest borrowing in SoftBank’s history.

(Son Masayoshi says SoftBank will go all-in on OpenAI to build an ASI superintelligence center)

Underwritten by four banks including JPMorgan Chase

Sources familiar with the matter say the proposed bridge loan will have a term of about 12 months and will be underwritten by four major banks, including JPMorgan Chase. The report notes that negotiations between SoftBank and the banking syndicate are still ongoing, and final loan terms and details may still change.

SoftBank owns about 11% of OpenAI

As of the end of December last year, SoftBank had invested over $30 billion in OpenAI and held approximately 11% of the company’s equity. This AI leader, known for developing ChatGPT, has recently been listed alongside Arm Holdings, a major UK chip design company, as one of SoftBank Group’s most important investments.

(AI is still hot! SoftBank increases investment in OpenAI by $30 billion, expands funding for Anthropic)

S&P Downgrades Credit Outlook, Warns of Liquidity Risks for SoftBank

To support ongoing investments in OpenAI and meet its large capital needs, SoftBank has recently sold its holdings in Nvidia and other assets. This move has raised concerns about its financial health. S&P Global Ratings recently downgraded SoftBank Group’s credit outlook and issued a warning that the massive AI investment expenditures could put significant pressure on the company’s liquidity.

(SoftBank liquidates Nvidia holdings, cashes out $5.8 billion; Son Masayoshi shifts focus to other AI strategies)

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