OpenAI's IPO is unlikely this year, SoftBank's cash-out window may be further delayed, and five-year CDS surges to a three-year high.

OpenAI's IPO is unlikely this year, SoftBank's cash-out window may be further delayed, and five-year CDS surges to a three-year high.

With OpenAI's IPO delayed, the window for SoftBank to realize its holdings may be further postponed, increasing pressure on the credit market.

On September 16, according to Bloomberg, CMA data showed that SoftBank's five-year credit default swaps (CDS) were around 384.6 basis points, reaching their highest level since 2023. Meanwhile, OpenAI is in preliminary talks with investors regarding a new round of financing, targeting a valuation of over $1.2 trillion.

OpenAI CEO Sam Altman previously stated that the company's long-awaited IPO is still in progress, but will not take place this year. Bloomberg Intelligence credit analyst Sharon Chen pointed out that the IPO delay means that SoftBank's sale of its OpenAI stake and recovery of investment funds may be further postponed, while rising financing costs are also increasing SoftBank's debt burden.

CDS gains coupled with IPO delays put pressure on SoftBank's financing and monetization efforts.

In a report on Wednesday, Sharon Chen stated that SoftBank's "financing costs are rising," and its offshore bond spreads have widened significantly amid supply concerns and increased exposure to OpenAI.

SoftBank has committed $64.6 billion to OpenAI, making it one of its largest single investments to date. With OpenAI's valuation continuing to climb, but the IPO timeline remaining unclear, there is significant uncertainty as to when SoftBank will be able to realize some of its holdings through an IPO.

Meanwhile, SoftBank continues to actively raise funds through the bond market. The company recently completed a ¥1 trillion retail bond issuance in Japan and is preparing for potential overseas bond issuances. However, rising CDS rates mean the market is demanding higher credit risk premiums from SoftBank, potentially putting pressure on future debt financing pricing terms.

For SoftBank, the increased investment in OpenAI and the delayed IPO mean longer periods of capital tied up and delayed monetization of its holdings. Changes in credit market pricing also reflect investors' concerns about this.

Risk Warning and DisclaimerInvesting involves risk; please exercise caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Any investment decisions made based on this information are at your own risk.