(Bloomberg) — SoftBank Group Corp. has raised about $1.86 billion through a dollar- and euro-denominated bond offering to fund a bigger investment in artificial intelligence, one of the biggest foreign-currency offerings by a Japanese company this year.
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Billionaire Masayoshi Son's company raised $900 million in two dollar-denominated tranches and 900 million euros ($964 million) in two euro-denominated tranches in its first non-yen bond offering since 2021, the company said. SoftBank said the proceeds would be used to repay debt and fund operations. The company's shares also rose on optimism about the AI investment.
SoftBank joins a bond boom by issuers in Asia and elsewhere, including even bigger deals by other Japanese borrowers such as Takeda Pharmaceutical Co. and Rakuten Group Inc. Investors are looking to secure higher yields before central banks outside Japan start to cut rates, with the Bank of Japan likely to raise them further from their lows this year. Japanese companies are increasing their bond deals overseas as larger markets like the U.S. allow them to borrow more, including for junk bonds.
“Bond investors are pumping money into SoftBank Group, betting on future growth potential in AI-related areas,” said Takashi Nakagawa, senior credit analyst at Tokai Tokyo Information Research Institute. “The company's large bond issuance since the beginning of the year has significantly increased its financial flexibility.”
SoftBank and its founder Son have made big recent investments in AI, raising hopes that the pace of activity in the field will accelerate. This year, SoftBank directly invested $200 million in Tempus AI, a startup that analyzes medical data to help doctors and patients find better treatments. More recently, it invested in Perplexity AI at a $3 billion valuation, betting on companies that aim to use AI to rival Alphabet Inc.'s Google search.
Longer term, SoftBank plans to spend about $100 billion on AI-related chips in a project called “Izanagi,” Bloomberg News reported in February.
SoftBank, which has a BB+ rating from S&P Global Ratings, also used the money to issue $400 million of five-year dollar notes with a coupon of 6.75%. That's compared with a 2029 bond issued in April by domestic rival Rakuten Group Inc. that S&P rated one notch lower at BB. The bond was yielding about 8.9% in Tokyo on Friday, according to data compiled by Bloomberg.
Meanwhile, SoftBank's shares rose 3.5% on Friday. Tokai Tokyo raised its target price for the company to 12,000 yen from 9,750 yen on expectations that the company's AI investments will increase its net asset value next year, Nakagawa said.
–With assistance from Min Jeong Lee.
(Added Japan's other major foreign-currency bond issuers in the third paragraph and added bond details throughout.)
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