SoftBank’s attempt to use OpenAI as collateral for a loan hits another obstacle; the market begins to question its debt repayment ability.

SoftBank Group's financing plan using its OpenAI equity as collateral has suffered setbacks, raising doubts about the Japanese tech giant's ability to repay its debts. According to Bloomberg, negotiations between SoftBank and potential lenders over a downsized $6 billion margin loan have stalled due to growing concerns about the valuation of the collateral. This comes just a few weeks after SoftBank was forced to reduce its originally planned $10 billion loan size by 40%. Sources say SoftBank is evaluating multiple alternative financing options, but the margin loan option has not been completely ruled out. News of the stalled negotiations sent SoftBank shares tumbling by as much as 9.7% during trading on Wednesday. Nonetheless, the stock is still up about 45% year-to-date, previously benefiting from a surge in OpenAI investment valuations that boosted quarterly profits. On June 1, SoftBank surpassed Toyota to become the most valuable listed company in Japan. Valuation difficulties cause lenders to hesitate The core issue behind the breakdown in negotiations is that lenders struggle to give a reasonable valuation to OpenAI, which is not a publicly traded company. According to Bloomberg citing insiders, some previously reluctant potential lenders began to re-examine the feasibility of the loan after news last month that OpenAI is preparing for an IPO—but this shift was still not enough to push the deal through. SoftBank reportedly had secured about $5 billion in indication commitments before talks stalled, but sources said the binding power of these commitments is questionable. OpenAI has secretly submitted its IPO application in the US and is working with Goldman Sachs and Morgan Stanley, with a possible listing as soon as this fall. Hua Cheng, head of Asian credit research at AllianceBernstein, said: "The margin loan is just one piece of a larger puzzle. Unless we see a significant deterioration in SoftBank's financing ability, we wouldn't see it as a standalone risk signal. The ideal scenario is for OpenAI to complete its IPO this year, allowing SoftBank to sell part of its holdings to repay debt, which is also what credit investors expect." Debt pressure looming for 2027 maturity The obstacle to financing is underpinned by an even larger and more imminent debt pressure. To support its investment in OpenAI, SoftBank has drawn on $40 billion in bridge financing, due for repayment by March 2027. SoftBank says this loan "may be repaid using existing assets and other financing methods," but the specifics remain unclear. Meanwhile, the shares held by SoftBank in Arm Holdings and Intel have surged 197% and 192% respectively this year, theoretically could be used as new collateral assets. However, if even OpenAI—a core asset—struggles to attract lenders, the terms for other assets may be even more limited. SoftBank may also consider issuing additional bonds to supplement liquidity, but no decisions have been made yet. The cost of Masayoshi Son’s AI gamble As SoftBank’s financing difficulties emerge, founder Masayoshi Son’s AI investment strategies are facing mounting scrutiny. With competitor Anthropic achieving a series of technical breakthroughs recently, some investors are becoming doubtful about SoftBank’s $60 billion commitment to OpenAI, and there is unease among some SoftBank officials as well. Masayoshi Son has not scaled back. Last month, SoftBank announced plans to invest up to €75 billion in France to build AI data center infrastructure. This figure far exceeds SoftBank's current available funds, once again drawing market attention to its capital discipline. Having nearly gone bankrupt after the burst of the internet bubble, Masayoshi Son is now playing an even bigger bet—and this time, creditor patience seems to be waning. Risk Disclaimer The market involves risks; investing should be done cautiously. This article does not constitute personal investment advice, nor does it take into account any individual user's special investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Invest accordingly, at your own risk.