Softbank Valuation Nears Half Its June Peak Arabian Post

(MENAFN- The Arabian Post) clearfix"> SoftBank Group shares fell sharply on Thursday, bringing the Japanese investment company's market value close to half its June peak as investors questioned the cost of financing its expanding artificial intelligence commitments.

The stock dropped more than 5% in Tokyo trading, extending a retreat that has accompanied broader selling across Asian technology markets. The decline has put renewed attention on SoftBank's reliance on borrowing and the uncertain timetable for returns from investments in OpenAI and other artificial intelligence businesses.

SoftBank's shares reached a record 8,632 yen in June. By mid-October they had already lost roughly 38% of that value, while the cost of protecting its debt against default had climbed. Thursday's selling narrowed the distance to a 50% decline, although the precise reduction in market capitalisation depends on the closing share price and shares outstanding.

The sell-off coincided with weakness in semiconductor and technology companies across Japan and South Korea. Tokyo Electron also declined sharply, while Japan's Nikkei 225 index fell as investors reassessed the financing demands and prospective profits of artificial intelligence infrastructure.

SoftBank, led by founder and chief executive Masayoshi Son, has committed substantial capital to OpenAI, the developer of ChatGPT. On 1 October, the company announced completion of a $10 billion final instalment of its latest investment programme, taking cumulative investment in OpenAI to $64.6 billion and its ownership interest to approximately 13%.

The company said the final instalment was financed through proceeds from foreign currency bonds issued in September. It also confirmed that a bridge financing facility established earlier this year had been fully repaid, with its remaining undrawn capacity cancelled.

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That refinancing has not eliminated investors' concerns about future funding requirements. SoftBank raised $11.1 billion through dollar- and euro-denominated high-yield bonds in September, a record corporate offering in that category. The transaction demonstrated its ability to attract lenders but also highlighted the price it must pay for capital.

One bond maturing in 2034 carries a coupon of 9.75%, the highest SoftBank has paid. By comparison, Alphabet issued a bond maturing in 2033 with a coupon of 5.2% in August. The difference reflects varying credit profiles, maturities and market conditions, rather than a directly comparable measure of default probability.

Market pricing has nevertheless signalled greater unease. SoftBank's five-year credit default swap spread reached about 432 basis points on 19 October, its highest level since November 2022. Such contracts become more expensive when investors demand greater compensation for the risk of a borrower failing to meet its obligations.

The group faces particular scrutiny because the value of its portfolio is concentrated in a small number of large technology holdings. Its investments in OpenAI and chip designer Arm account for a substantial share of estimated asset value, leaving its financial position sensitive to changes in valuations and expectations for artificial intelligence.

A delay to a potential OpenAI stock market listing has complicated expectations for when SoftBank might realise some of its investment. OpenAI chief executive Sam Altman has said the company will not pursue a listing this year. Any eventual flotation would remain subject to market conditions and decisions by OpenAI itself.

Credit analysts have expressed differing assessments of the risk. Mark Chapman, head of telecoms and media at CreditSights, has warned that concentration and pressure on cash flow have increased risks for SoftBank creditors. S&P Global Ratings analyst Makiko Yoshimura, however, has indicated that Arm's share performance supports SoftBank's credit quality and that a delayed OpenAI listing does not immediately damage its creditworthiness.

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Investors are also weighing the contrast between gains recorded on private holdings and cash available to service debt. Valuation increases can strengthen reported net assets without producing immediate proceeds, whereas interest payments require cash. That distinction becomes more important when borrowing costs rise and prospective exits are delayed. SoftBank has maintained that its asset base and financing arrangements provide financial flexibility despite these pressures.

SoftBank has continued exploring acquisitions linked to its artificial intelligence and robotics strategy. Discussions concerning security services group Allied Universal have drawn attention because a transaction of that scale could require additional financing, although no completed acquisition has been announced.

The company's financial disclosures for the year ended March 2026 recorded cumulative OpenAI investments of $34.6 billion at that date, with a fair value of $79.6 billion. Those figures preceded the additional investments completed during the current financial year.

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