SoftBank Group plans 1 trillion yen retail bond sale for AI push

2026-08-18

SoftBank Group Corp (SBG) is preparing to issue about 1 trillion yen of bonds for retail investors, people familiar with the matter said on the 18th. It is expected to be the largest retail bond sale by a domestic company. The move comes as global competition for investment in artificial intelligence intensifies, drawing in household money in Japan.

Issuance plan and use of proceeds

This would be SBG's third retail bond issuance in 2025, following offerings in April and June. Terms, including the coupon, are expected to be decided in early September, and the bonds are likely to have a seven-year maturity.

On a single retail bond issue, the largest sale by SBG so far was the 600 billion yen it issued in 2025. If the new offering goes ahead, it would sharply surpass that record. Including bonds sold to institutional investors such as pension funds and mutual funds, the largest issuance on record is the 1 trillion yen total sold in December 2020 by NTT Finance, the financial arm of NTT. The latest SBG bonds would match that scale.

The funds will be used for redemption of existing bonds and for mergers and acquisitions in the 'physical AI' field, where AI autonomously controls robots. SBG has said it plans to buy ABB's robotics business, the robotics unit of the Swiss heavy electrical equipment maker, for 5.4 billion dollars.

The money could also be used to repay bridge loans raised from financial institutions in Japan and the United States for additional investment in OpenAI. SBG plans to invest a total of 10 trillion yen by October 2025, with part of the funding covered by bridge loans.

Rising debt and interest burden

SBG plans to expand investment while increasing interest-bearing debt. As an investment company, SBG's credit strength is measured by loan-to-value, or LTV, which shows net debt as a share of its holdings. Supported by gains in the share price of its subsidiary Arm Holdings, the British semiconductor design giant, SBG's LTV stood at 13% at the end of June, down 4 percentage points from the end of March. That gives it room to add more debt.

S&P Global Ratings assigns SBG a BBB- equivalent rating. In July, it raised the outlook from 'negative' to 'stable' on the back of gains in Arm's shares.

Interest costs are rising, however. Market expectations are that the coupon on the latest retail bond could be in the high 4% range. The seven-year retail bond SBG issued in 2025 carried a coupon of 3.98%, while the December 2024 issue had a coupon of 3.15%.

Competition for household money

As AI investment accelerates globally, hyperscalers are issuing large amounts of corporate debt. Government bond issuance is also rising in many countries amid higher defense spending and tax cuts, intensifying the competition for funding in bond markets.

In Japan, household investment appetite has strengthened on the back of persistent inflation and higher interest rates, and companies are rushing to attract retail money. Total retail bond issuance in 2025, including the latest SBG sale, is expected to reach a record 2.8 trillion yen.

An executive at a major brokerage said there is a limit to the amount of retail bonds that can be sold and that companies are waiting their turn to issue. As the battle for household money intensifies, banks are raising time deposit rates to stem deposit outflows. The increase in corporate bond issuance is also likely to affect sales of individual government bonds and flows into stocks and mutual funds through the Nippon Individual Savings Account, or NISA, system.

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