SoftBank tests its own borrowing limits with $30bn bet on OpenAI
Masayoshi Son faces investor nerves with massive spending on AI investments
SoftBank is testing a key self-imposed borrowing limit as it commits a further $30bn to OpenAI, a move that risks unsettling investors already wary of its growing exposure to artificial intelligence.
The Japanese group aims to keep its loan-to-value ratio — a measure of net debt against the value of its holdings — below 25 per cent in normal conditions. But it now accepts the threshold could be exceeded in the coming months as it increases AI investment.
“I don’t deny the possibility in the future that we may go temporarily beyond 25 per cent,” chief financial officer Yoshimitsu Goto told the FT.
The move marks one of the clearest signs yet that SoftBank is ready to push its own financial guardrails to back OpenAI, despite mounting investor unease over the costs, competition and uncertain returns of the AI boom.
“There’s [an estimated] $50bn of funding, between OpenAI, investments and refinancing, that they have got to put in place in the course of 2026,” said David Gibson, an analyst at MST Financial. “The loan to value will hit 25 per cent or more. So to me that’s the story as I’m not sure the market is prepared for it.”
SoftBank’s LTV has already increased from 16.5 to 20.6 per cent in the quarter to December. Shares have fallen more than 45 per cent since last October as investors grow more cautious about its AI exposure, particularly as OpenAI faces intensifying competition from Google and Anthropic.
Spreads on SoftBank’s credit default swaps have widened to their highest level in nearly a year, while S&P this month revised its outlook on the group to negative, citing the planned OpenAI investment.
Goto said that, if needed, SoftBank would bring its loan-to-value ratio back below 25 per cent as quickly as possible through a combination of asset sales, listings and asset-backed financing.
While some insiders and advisers are nervous about the scale of its ambitions, SoftBank chief Masayoshi Son is convinced of the need to continue to pour money into achieving the next level of artificial intelligence.
He has already invested more than $34bn in OpenAI for a roughly 11 per cent stake, and shifted the company to play a central role in what the billionaire sees as the next stage of humanity’s development.
As well as refocusing SoftBank’s Vision Fund investment vehicles on AI, Son has bought semiconductor companies to complement Arm, agreed to acquire robotics groups and is building out power and data centres in the US.
However, the $500bn Stargate data centre project backed by SoftBank, OpenAI and Oracle has been scaled back, said people familiar with the matter.
The group’s more than ¥30tn in net asset value, said Goto, provides balance sheet ammunition to rein in leverage if needed.
“If we do nothing, then the 25 per cent of loan-to-value threshold may go up to 26 per cent to 27 per cent [but] . . . with the utilisation of asset-back financing . . . we are quite convinced that we will be able to manage our loan-to-value back down to less than 25 per cent,” he added.
SoftBank has a variety of assets to draw on. This month it pulled off the successful IPO of payments group PayPay, with a more than $12bn valuation. But raising debt, asset-backed financing and public listings are subject to market risk at a time when geopolitical tremors are hitting company valuations.
Gibson said another issue is that markets know SoftBank needs to raise funds, particularly after it sold its entire stake in Nvidia for $5.8bn last year. “That made everyone think ‘oh, you do have to sell stuff’ . . . and therein lies the challenge,” he said.
Most significantly, SoftBank is also relying on a potential OpenAI IPO to bring down its leverage ratio. The listing would reduce SoftBank’s ratio of private to public assets.
S&P said its decision to revise SoftBank’s outlook to negative reflected the additional investment in OpenAI, adding that “the share of unlisted assets in its portfolio is likely to rise to more than 50 per cent” from an estimated 42 per cent at the end of last year.
Although SoftBank is confident in its success, some investors note that the decline of the group’s own share price could give some indication as to how OpenAI’s valuation is changing in real time.
SoftBank’s shares peaked last year as investors rushed to get exposure to OpenAI as analysts suggested the US start-up could eventually be worth upwards of $1.5tn.
For others, it is now the LTV ratio that has become a Rorschach test for how to view SoftBank.
“If you don’t like SoftBank as an investment, then the LTV going above 25 per cent matters,” said one analyst in Tokyo. “If you think SoftBank is making the right moves with OpenAI, then you can look through it.”
For its near-term commitments, SoftBank has put in place about $40bn of bridge loans with its main lenders, including Japanese megabank Mizuho. The OpenAI investments are to be made in three instalments in April, July and October.
Some investors say banks are incentivised by the prospect of roles in a potential OpenAI IPO. But Goto said the bridge loans show continued market confidence in SoftBank.
“The banks that are closest to us understand all of [our investment and financial plans] very well,” he said. “That is why they also agreed to participate in bridge finance, for this $30bn OpenAI investment activity, in such a short timeframe.”