Credit Update: 7+% yields offered by SoftBank’s medium-tenor USD bonds.

A History of Bold Bets — Hits and Misses

As of 31 March 2026, Arm and OpenAI represented approximately 40% and 25% of adjusted equity value, respectively, making them the two most important drivers of SoftBank’s NAV and credit profile.

Arm is a leading semiconductor intellectual property company whose chip architecture underpins most smartphones globally and is increasingly being adopted in AI servers and data centres. SoftBank’s cumulative investment cost is approximately US$32b, against a current market value of approximately US$390+b (as of 23 June 2026), reflecting the substantial unrealised appreciation that has made Arm the group’s largest single holding.  However, SoftBank’s approximately 90% ownership stake limits immediate monetisation flexibility, as any large-scale disposal would likely need to be executed gradually.

OpenAI is the developer of ChatGPT and one of the leading companies in generative AI. SoftBank’s cumulative investment cost in OpenAI stood at US$34.6b as of March 2026, against an estimated fair value of US$79.6b, representing an unrealised gain of US$45b. Following the US$30b follow-on investment committed in February 2026, SoftBank’s total cumulative investment cost will reach US$64.6b upon completion of all tranches by October 2026. While OpenAI continues to demonstrate strong commercial momentum, the investment remains privately held and therefore lacks the liquidity and valuation transparency associated with listed securities.

Outlook 

The principal risk remains a deterioration in AI-related valuations before these catalysts materialise. Given the growing concentration of the portfolio in Arm and OpenAI, a significant correction in AI sentiment could weaken NAV, reduce financing flexibility, and place upward pressure on leverage metrics.

Manageable liquidity position against near-term obligations, underpinned by substantial but less liquid asset coverage 

As of 31 March 2026 (FY2025), SoftBank holds ¥5.4T in cash and equivalents, supplemented by approximately ¥0.8T of undrawn committed credit facilities, resulting in a total available liquidity of roughly ¥6.2T. This compares against the total interest-bearing debt of ¥24.7T, of which ¥7.3T is due within the next twelve months. After the end of its reporting period, SoftBank further tapped the bond market in April and June for roughly ¥820B. Beyond on-balance-sheet liquidity, SoftBank retains significant financial flexibility through its ability to monetise portfolio holdings and utilise secured financings.

Given that SoftBank functions primarily as an investment holding company, the key credit metrics to monitor would be its NAV and LTV. As mentioned earlier, NAV is at a record ¥40.1T, which improves the group’s asset coverage compared to FY2024. However, we stress the inherent sensitivity of this metric to market conditions and portfolio valuations. This is especially relevant today, given the growing concentration of NAV in Arm and OpenAI, whose valuations are closely tied to sentiment surrounding AI and technology markets. 

LTV (net debt/equity value of holdings) improved modestly to 17% as of FY2025, compared to 18% a year prior. We note this metric is comfortably below management’s internal target of 25% and 35% ceiling. Per our estimate, a severe increase to 35% LTV would require an approximate 79% decline in the combined value of both holdings (assuming debt levels remain unchanged)— a scenario consistent with a broad-based AI valuation collapse rather than an idiosyncratic issue at either company. Importantly, SoftBank has demonstrated a consistent commitment to maintaining LTV within these parameters across multiple market cycles (look at Chart 3 below). During periods of market stress, including the COVID-19 pandemic and the subsequent technology sector correction, management actively reduced leverage through asset disposals, prepaid forward transactions, share-backed financings and debt reduction measures to preserve balance sheet flexibility. As a result, LTV has generally remained within management’s stated risk appetite despite significant fluctuations in portfolio valuations over the past five years. Although current LTV headroom remains comfortable, its resilience is increasingly tied to two assets: Arm and OpenAI. As OpenAI lacks independent market pricing, a correlated decline in AI valuations across both holdings would pose a more meaningful risk to NAV and LTV. 

This balance sheet capacity, together with SoftBank's willingness to monetise assets when required, has historically been an important support for the credit profile. However, this mitigant is increasingly constrained by the limited liquidity of its largest holdings: Arm's roughly 90% SoftBank ownership limits disposal flexibility without market impact, while OpenAI's private, pre-IPO status materially limits monetisation flexibility absent a listing or strategic transaction. As the portfolio shifts further toward these two concentrated, less liquid positions, asset coverage and LTV sensitivity should increasingly anchor the credit assessment, even as the historical track record shown in Chart 3 supports management's demonstrated discipline in defending its stated risk appetite.

Chart 3: Historical LTV since 2020 has been within management’s internal target of <25%

Source: Company Data, iFAST Compilations, as of 31 March 2026. 

Table 1: Bond recommendations 

Overall, we see modest improvement in SoftBank’s credit profile as of 31 March 2026 compared to a year ago. NAV reached a record high of ¥40.1T, while LTV improved slightly to 17%, reflecting the strong appreciation of Arm and OpenAI. Liquidity remains adequate, supported by ¥5.4T of cash and equivalents, available credit facilities and the group’s proven ability to monetise assets when required.

Looking ahead, we expect SoftBank's credit profile to face increasing pressure from its AI investment strategy. Significant commitments to OpenAI and related AI infrastructure are likely to consume liquidity and increase leverage, while NAV becomes increasingly concentrated in Arm and OpenAI. Although both are beneficiaries of AI, their growing importance may reduce monetisation flexibility relative to historical anchor holdings. Consequently, while the balance sheet remains well supported today, future credit quality will become increasingly dependent on the performance and valuation of a small number of AI-related assets.

In Table 1 above, we highlight a couple of SoftBank’s outstanding USD bonds for consideration. In general, these bonds offer a yield pickup of approximately 50+ to 140+bps against comparable peers as seen in the Bloomberg chart below.  

For investors comfortable with the concentration risk SoftBank has in AI, we think the two issues of SOFTBK 8.250% 22Oct2031 Corp (USD) and SOFTBK 7.250% 10Jul2032 Corp (USD) stand out. In general, they offer the highest yield pickup (~140+bps) against their peers, while also offering a compelling 250+bps yield spread over comparable US sovereigns.