NEW YORK: Banks that recently signed a US$40bil bridge loan with SoftBank Group Corp for its investment in US tech giant OpenAI have attracted more lenders to the deal in syndication, people familiar with the matter say.
At least eight banks had submitted commitments as sub-underwriters as of late last week, according to the people, who asked not to be identified discussing private matters.
It’s common for the initial lenders on a deal to distribute loans to a broader group.
HSBC Holdings Plc, BNP Paribas SA and Intesa Sanpaolo SpA are among the new joiners, the people said.
The development came just days before the Wall Street Journal reported this week that OpenAI had missed internal revenue and user-growth targets, including a goal of reaching one billion weekly active ChatGPT users by the end of 2025.
Banks joining the loan are providing financial support for SoftBank founder Masayoshi Son’s push into artificial intelligence (AI), even as risks grow.
S&P Global Ratings last month lowered the company’s credit outlook, citing the danger that its investments in OpenAI may hurt its liquidity.
That was after SoftBank committed an additional US$30bil to OpenAI after having previously put in more than that amount.
In the latest sign of the group’s AI ambitions, the Financial Times or FT reported that SoftBank plans to establish and float a standalone AI robotics and data centre company called Roze in the United States.
The Japanese investment firm aims to list Roze as soon as this year at a targeted valuation of US$100bil, according to the FT.
As traders across markets weigh SoftBank’s drive deeper into AI, some are focusing more on the opportunities while others put more weight on the risks.
The company’s shares are up 22% this year.
In contrast, credit-default swaps-which can be used to hedge against risks with a borrower’s debt-have widened 74 basis points (bps), after touching the highest in a year last month.
The new lenders were each asked to commit a minimum of US$5bil, though the final amounts may differ from bank to bank, the people said.
The deal will be launched into broader syndication in the coming days, the people said.
Representatives for HSBC, BNP, Intesa and SoftBank declined to comment.
The one-year deal would pay an initial interest margin of about 250 bps over the Secured Overnight Financing Rate (SOFR), the people said.
That would mean an interest rate of 6.14% at current SOFR levels.
The banks join five original underwriters who signed the deal in late March: JPMorgan Chase & Co, Goldman Sachs Group Inc, Mizuho Bank Ltd, Sumitomo Mitsui Banking Corp and Mitsubishi UFJ Financial Group Inc.
SoftBank is also separately seeking a US$10bil margin loan backed by its OpenAI shares.
That facility could potentially pay an initial interest margin of about 425 bps over SOFR.
That would work out to about 7.89% at the latest levels.
Earlier this month, SoftBank raised US$3.6bil through a multi-tranche bond deal, with part of the proceeds earmarked for repaying bridge loans tied to its investments in OpenAI.
The offering included a 10-year dollar tranche that carried a 8.5% coupon, the highest ever for the firm on such a security. — Bloomberg
