SoftBank seeks $10 billion margin loan backed by OpenAI shares as AI bet intensifies

SoftBank Seeks $10 Billion Margin Loan Backed by OpenAI Shares

SoftBank Group Corp. is seeking a $10 billion loan secured by its shares in US artificial intelligence giant OpenAI, people familiar with the matter said, as it takes on more debt for its push into AI. The two-year margin loan would carry an option for the Japanese conglomerate to extend the borrowing by an additional year, according to the people, who asked not to be identified discussing private matters. A margin loan is an arrangement in which companies use their assets such as stock for collateral to borrow against. A SoftBank representative declined to comment. Get the Tech Newsletter bundle. Get the Tech Newsletter bundle. Get the Tech Newsletter bundle. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Bloomberg's subscriber-only tech newsletters, and full access to all the articles they feature. Plus Signed UpPlus Sign UpPlus Sign Up By continuing, I agree to the Privacy Policy and Terms of Service. SoftBank has been piling on debt as its founder Masayoshi Son seeks to position himself as a linchpin in the global AI boom, with large-scale investments into ChatGPT maker OpenAI. SoftBank recently committed an additional $30 billion to the US firm after having already previously put in more than that same amount. Last month, SoftBank signed a $40 billion loan -- its largest-ever lending facility solely denominated in dollars -- in part for its most recent follow-on investment. In March, S&P Global Ratings lowered the group's credit outlook to negative from stable, citing the danger that its investments in OpenAI may hurt the Japanese company's liquidity and credit quality of its assets. There have been recent signs that creditors are keeping money flowing to SoftBank for its OpenAI investments, so long as the price is right. The Japanese group raised $3.6 billion last week through a multi-part bond deal, with part of the proceeds earmarked for repaying bridge loans tied to its investments in OpenAI. The offering included a 10-year dollar tranche that carried a 8.5% coupon, the highest ever for the firm on such a security. Read more about SoftBank: SoftBank Pays Record 8.5% on Part of $3.6 Billion Bond Sale SoftBank Lenders Ask More Banks to Join $40 Billion OpenAI Loan SoftBank's $30 Billion OpenAI Bet Spurs S&P Credit Outlook Cut SoftBank Is in Talks to Invest $30 Billion More in OpenAI For the current margin loan that SoftBank is seeking, no decisions have been taken and details could change. Discussions have included a potential initial interest margin of about 425 basis points over the benchmark Secured Overnight Financing Rate, people familiar with the matter said. That would work out to about 7.88% at the latest SOFR levels. SoftBank is no stranger to margin loans. As of November, it had expanded a margin loan using its shares in Arm Holdings Plc to $20 billion. SoftBank also holds billions of dollars of stakes in companies including T-Mobile US, Intel Corp. as well as ByteDance Ltd. that it could sell down to shore up its finances.

SoftBank seeks $10 billion margin loan backed by OpenAI shares: Report

SoftBank Group is seeking a substantial $10 billion loan. This loan is backed by its shares in ChatGPT-maker OpenAI. The move signals SoftBank's aggressive push into artificial intelligence. This follows previous significant investments and loans for the AI firm. The company is increasing its debt to fund its AI ambitions. SoftBank Group is seeking a $10 billion loan secured by its shares in ChatGPT-maker OpenAI as it takes on more debt for its push into AI, Bloomberg News ⁠reported ⁠on Wednesday, citing sources. The loan underscores the Japanese investment conglomerate's increasingly aggressive bet on artificial intelligence, following years in which SoftBank swung between outsized gains and heavy losses in ⁠its Vision Fund. Also read: Lululemon says it picks former Nike executive Heidi O'Neill as next CEO The two-year margin loan would carry an option for SoftBank ⁠to extend the borrowing by an additional year, the report said. Reuters could not immediately verify the report. OpenAI and SoftBank did not immediately respond to Reuters' requests for comment. The development follows a $40 billion bridge loan that SoftBank secured in March to bolster investments in OpenAI ⁠and for general corporate purposes as it continues to strengthen ties with the AI firm. The Japanese investor has previously agreed to invest $30 billion in OpenAI through its Vision Fund 2.

SoftBank Bets Big On AI With $10B Loan Backed By OpenAI Stake

SoftBank Group is pursuing a $10 billion loan backed by its stake in U.S. artificial intelligence leader OpenAI, as the firm ramps up borrowing to fund its expansion into AI. Following the announcement, credit-default swaps rose by about 10 basis points, according to Bloomberg. The increase brings it to roughly 360 basis points, nearing March's one-year high of 376 basis points. The $10 billion margin loan -- a revolving line of credit that allows a firm to borrow cash to finance additional investments -- would have a two-year term. Under its terms, SoftBank would have the option to extend the loan for an additional year, sources told Bloomberg. Softbank has previously made large investments in Sam Altman's company. The firm made an additional follow-on investment of $30 billion earlier this year, representing a 13% ownership interest in the company. "AI is transforming the world at an unprecedented pace. OpenAI is a clear leader, with world-class technology and an unparalleled global user base, and we have strong conviction in its continued growth. Through this additional investment, we will accelerate OpenAI's research and ecosystem expansion, while advancing our own ASI strategy," Masayoshi Son, Chairman and CEO of SoftBank Group Corp., said at the time. In early March, S&P downgraded SoftBank's credit rating, citing that the additional investment would "further reduce SoftBank Group's financial capacity." The report added that OpenAI is one of its investments with the "weakest credit quality." "The company's investments in AI, including OpenAI, mostly involve fledgling startups and private companies that we believe are exposed to significant AI innovation risk and fierce competition. The negative outlook reflects our view that SoftBank Group's large follow-on investment in OpenAI means it will take longer than we had assumed for the company to restore the liquidity and quality of its investment assets," the report said. The artificial intelligence company is understood to be preparing to IPO later this year, with reports citing as early as October. Photo: Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

SoftBank seeks $10 billion margin loan backed by OpenAI shares

SoftBank is seeking a $10 billion loan secured by its shares in U.S. artificial intelligence giant OpenAI, people familiar with the matter said, as it takes on more debt for its push into AI. The two-year margin loan would carry an option for the Japanese conglomerate to extend the borrowing by an additional year, according to the people, who asked not to be identified discussing private matters. A margin loan is an arrangement in which companies use their assets such as stock for collateral to borrow against.

SoftBank Signs $10 Billion Loan Against OpenAI Stake to Fuel AI Innovation

SoftBank Group is all set to explore a $10 billion margin loan using its stake in OpenAI as collateral. Reportedly, this deal could run for about two years, with an option to extend. The company explains that this deal will allow SoftBank to unlock liquidity. This removes the need to sell shares, preserving its exposure to a high-value AI asset. SoftBank maintains its ownership stake through share The company secures funding while maintaining its future growth potential. As reported by Bloomberg News on Wednesday, "SoftBank Group is seeking a $10 billion loan secured by its shares in ChatGPT-maker OpenAI as it takes on more debt ⁠for ⁠its push into AI." Masayoshi Son, founder of SoftBank, already repositioned SoftBank as an AI-first investor. The OpenAI stake sits at the centre of that plan. Earlier, the company had invested billions of dollars in AI ventures. Moreover, this move demonstrated that AI would generate future profits through this latest action.