SoftBank to Issue $11 Billion in Junk Bonds to Fund OpenAI Investment

SoftBank plans to borrow over $11 billion through junk bonds to finance its investment in OpenAI. This includes issuing $10 billion in bonds and an additional 1 billion euros. The terms for these bonds are expected to be set shortly, with payment to OpenAI due in October 2026.

The decision comes as OpenAI anticipates a staggering cash burn of nearly $280 billion by the end of 2030, raising concerns about its financial sustainability. SoftBank has also lined up $40 billion in short-term loans to support its stake in OpenAI. The Financial Times notes that these junk bonds will offer high interest rates but carry significant risks, as investors may not recoup their investments. This follows a trend of increasing financial maneuvers in the AI sector, reflecting the high stakes involved in funding AI development.