SoftBank's 5-year CDS rose to 432 basis points, and Masayoshi Son is still increasing investment in OpenAI and AI infrastructure

[[**SoftBank's 5-year CDS rises to 432 basis points, the highest since November 2022; Masayoshi Son continues to add to OpenAI and AI infrastructure with high-interest debt, and the market worries about his credit risk and concentrated bets.**

**Key points**

**1. SoftBank's default insurance cost hits a near four-year high**

The 5-year CDS rose to 432 basis points, the highest among major Japanese companies, more than 130 basis points above Nissan Motor; the share price has fallen by more than half from its June high.

**2. Masayoshi Son continues to add to AI with high-interest debt**

SoftBank has invested a cumulative $64.6 billion in OpenAI and holds about 13%; it also plans to join a new funding round, invest in AI infrastructure and negotiate the acquisition of Allied Universal; the coupon on new debt reaches as high as 9.75%.

**3. SoftBank's leverage still has room, but cash flow pressure is rising**

LTV was 13% at the end of June, below the 25% management ceiling; Bloomberg expects net cash outflow of at least $6 billion in the fiscal year ending March 2027, and continued investment and acquisitions could push LTV higher.

**4. Analysts warn that SoftBank's bets are overly concentrated**

Some compare SoftBank to a roulette bet on only red or black and recommend shorting it; a bond manager says the strategy is too aggressive and would not pick SoftBank first.

**5. AI credit risk spills over, Wall Street steps up CDS hedging**

Average weekly CDS trading volume for AI-related companies such as Oracle and Nvidia rose from less than $2 billion in July to more than $9 billion in September; CoreWeave's 5-year CDS topped 1,100 basis points, showing pressure in the financing chain. 2026-10-24 11:27 Masayoshi Son's fuse is about to blow Zimu Bang quick read

This article is from the WeChat public account: Zimu Bang, author: Yuan Xinyue

On October 20, foreign media reported that the price of SoftBank's 5-year credit default swaps (CDS) rose to 432 basis points, the highest level since November 2022.

CDS can be simply understood as default insurance on debt—the higher the price, the more investors must pay to guard against default risk.

Today, the market's concern about SoftBank's credit risk has reached its highest level in nearly four years.

Yet Masayoshi Son has not stopped spending.

Earlier this month, SoftBank had just completed a new $10 billion investment in OpenAI, bringing its cumulative investment to $64.6 billion. Not long ago, the coupon on a batch of new debt it issued reached as high as 9.75%.

In addition, foreign media reported that OpenAI is trying to complete a new funding round before Anthropic's expected mid-November listing, but because some investors are hesitant about the high valuation, the target valuation for this round has been cut from $1.4 trillion to $1.25 trillion, a shrinkage of $150 billion. SoftBank, as an existing investor, was previously reported to be in talks to continue participating.

And SoftBank's share price has fallen by more than half from its June high.

Among major Japanese companies, SoftBank's default insurance price is now the highest, more than 130 basis points above second-ranked Nissan Motor.

Some analysts who have long followed SoftBank have expressed concern about Masayoshi Son's investment strategy.

On October 14, MST Financial analyst David Gibson, in an interview with the media, directly compared SoftBank to a roulette game. He said that SoftBank used to bet on many numbers on the roulette table. Now, it bets only on red or black, either losing everything or winning everything. In Gibson's view, SoftBank is concentrating more and more bets on a small number of AI assets.

And for investors who really need to consider whether to buy SoftBank bonds, such risk is not easy to accept.

James Athey, fixed income portfolio manager at British asset management company Marlborough, said that SoftBank's investment strategy is too aggressive and too concentrated, with almost all bets placed. Even when considering investing in high-yield bonds, he would not choose SoftBank first.

Another analyst, Amir Anvarzadeh, believes that Masayoshi Son's bet this time is bigger than ever before, and directly advises investors to short SoftBank shares.

However, Masayoshi Son should not be unfamiliar with such a situation.

Four years ago, SoftBank also went through a similar crisis.

In 2022, global tech stocks suffered a sell-off, the valuations of a batch of tech companies in which Masayoshi Son had heavy positions shrank sharply, and the Vision Fund posted huge losses one after another. Financial results released in November of that year showed that the Vision Fund lost about $7.2 billion in the July-September quarter, while in the previous quarter it had just lost about $17 billion.

Losing more than $24 billion in just half a year would make anyone sweat.

Masayoshi Son, who had once been searching everywhere for investment opportunities, had to put away his offensive posture. SoftBank sharply cut new investments, sold a large number of Alibaba shares to improve its financial condition, and launched layoffs in September of that year, cutting about 150 people across the Vision Fund and the group's international business.

By the November 11 earnings briefing, Masayoshi Son also announced that for a period going forward he would no longer attend SoftBank's quarterly earnings briefings and would devote more energy to its chip design company Arm.

Masayoshi Son once said that he was born an offensive person. But that time, he chose to retreat.

SoftBank began to preserve cash, reduce investment and wait for the market to improve. Only in 2023 did Masayoshi Son gradually regain his offensive rhythm.

Now, four years later, SoftBank's credit risk indicator has once again returned to a similar level.

Only this time, Masayoshi Son seems not to intend to stop.

In February this year, SoftBank announced an additional $30 billion investment in OpenAI, to be paid in three installments, completed in April, July and October respectively. Together with previous investments, SoftBank has put $64.6 billion (about RMB 431.5 billion) into OpenAI and holds about 13% of the shares.

So much money, of course, cannot all come from cash on hand.

In March, SoftBank signed a $40 billion bridge loan agreement with banks, mainly to support its investment in OpenAI—a so-called bridge loan is short-term funding borrowed as a stopgap, to be repaid later through other financing methods.

SoftBank drew down $30 billion from it in stages, and on September 15 of this year it repaid the remaining $25.9 billion early, then at the end of the month canceled the unused $10 billion facility. At this point, the $40 billion bridge financing agreement has been settled.

But repaying the bridge loan does not mean SoftBank has shed the corresponding financing burden; part of the funding need was met through long-term bonds, other financing and asset monetization.

On September 24, SoftBank announced the issuance of about $11.1 billion in dollar- and euro-denominated bonds, including a $4.5 billion dollar bond maturing in 2034 with an annual coupon as high as 9.75%.

This is the highest coupon on any bond SoftBank has ever issued. By comparison, a bond maturing in 2033 issued by Google parent Alphabet in August this year carries a coupon of only 5.2%.

Wall Street has begun demanding that Masayoshi Son pay a higher price for his bold bet.

But SoftBank management does not seem to think this money is expensive to borrow. On October 14, Alex Clavel, head of SoftBank Vision Fund Management, explained in a media interview why SoftBank would rather bear high interest than sell the assets it holds.

He said: "We borrow largely because we don't want to sell assets we believe will continue to appreciate."

In the view of SoftBank management, OpenAI's future upside is large enough that even with borrowing costs now close to 10%, it is still worth holding on.

Moreover, Masayoshi Son is not satisfied with the $64.6 billion already invested. According to foreign media reports, OpenAI is accelerating a new round of fundraising, and SoftBank is also in talks to participate. It is not yet clear how much SoftBank plans to invest, but continuing to follow on would create another new funding need.

Besides OpenAI, SoftBank has not been shy about spending elsewhere.

At the end of September, it had just completed the roughly $3.1 billion acquisition of data center investment management company DigitalBridge. Previously, SoftBank had agreed to acquire ABB's robotics business for about $5.375 billion, with the deal planned to close in the second half of this year.

Recently, Masayoshi Son has set his sights on U.S. security giant Allied Universal. According to foreign media reports, SoftBank is in preliminary talks to acquire the company, with a potential equity valuation of up to about $18 billion and a total transaction value that could reach $30 billion including debt.

OpenAI is still fundraising, data centers and the robotics business are still expanding, and new acquisition plans have emerged.

However, at least judging from previously disclosed financial data, SoftBank still has some financial room and has not yet reached the end of its rope.

As of the end of June this year, the investment assets held by SoftBank were worth about 83.11 trillion yen, and net debt calculated on a group basis was 10.81 trillion yen, corresponding to an LTV (loan-to-value ratio) of 13%.

This indicator measures net debt relative to the value of assets held. SoftBank's own management standard is no more than 25% under normal market conditions, and even in extreme cases it should be kept within 35%.

13% still leaves some room from the 25% ceiling.

But these are all data as of the end of June; since then SoftBank has continued to complete huge investments and acquisitions, and the market prices of the assets it holds have also fluctuated significantly. Especially for unlisted companies like OpenAI, even if equity valuations keep rising, it does not mean SoftBank can turn them into cash at any time.

Sharon Chen, a credit analyst at Bloomberg Intelligence, expects SoftBank's net cash outflow to reach at least $6 billion in the fiscal year ending March 2027. If it continues to expand AI investment or completes the Allied Universal acquisition, SoftBank will need to raise more funds, and LTV may gradually approach the 25% management ceiling.

Masayoshi Son does hold a large amount of valuable assets, but valuable assets ultimately cannot be used directly to pay bond interest. What is more, the prices of these assets are not stable.

If core investments such as OpenAI continue to appreciate, SoftBank can use the ever-growing asset value to support the next round of financing and investment.

SoftBank's creditors are not the only group feeling nervous.

On October 20 U.S. time, according to foreign media reports, Wall Street is seeing a wave of buying default insurance on AI-related companies.

According to Morgan Stanley statistics, in July this year, CDS on companies including Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom and Nvidia traded on average less than $2 billion per week; by September, that figure had exceeded $9 billion.

At the same time, the AI industry is borrowing more and more. According to statistics, since 2026, AI-related companies have raised about $466 billion cumulatively through bond issuance, private credit and other means, compared with only $101 billion in the same period last year.

These investors buying default insurance are not all doing so to protect bonds they hold; some equity funds and multi-asset funds have begun using CDS to hedge against the risk of AI stocks falling.

Such concerns do have a real basis. On the same day, The Wall Street Journal disclosed Anthropic's latest draft IPO prospectus.

In the first half of this year, Anthropic recorded a book net loss of $80.7 billion, a sharp widening from $13 billion in the same period last year. However, $72 billion of that came from accounting charges arising from changes in the value of financing instruments such as convertible notes, and does not mean the company actually burned that much cash.

More noteworthy is compute spending. Anthropic spent nearly $9 billion on compute and infrastructure in the first half of this year, already exceeding last year's full-year $7.3 billion. According to the draft prospectus, including deals still under negotiation, compute spending over the coming years could reach $750 billion, of which more than $600 billion involves agreements already signed.

Although Anthropic's first-half revenue has grown to $16.3 billion, such a massive long-term compute commitment will still test its future cash flow.

Take CoreWeave, a cloud computing company backed by Nvidia: it borrows heavily to buy GPUs and build data centers, then rents out compute to customers such as Microsoft.

As market concerns about AI debt risk heat up, CoreWeave's stock price continued to plunge in October, with cumulative declines approaching 40% as of October 23. Credit markets are also flashing warnings: its 5-year CDS quote has exceeded 1,100 basis points, and some bond yields have risen to around 16%.

AI companies need compute, data centers need funding, and chip companies need these customers to keep buying GPUs.

Several companies appear to be doing their own business, but the funding needs behind them are becoming ever more tightly linked.

On October 19, Mark Habib, head of digital infrastructure at S&P Global, also warned in a media interview: the AI-related debt and obligations borne by large tech companies may be greater than the outside world knows.

Some data center projects raise funds through complex financing structures, and large tech companies provide guarantees for the relevant projects or companies. S&P worries that some risks are not fully reflected in these companies' public financial data.

However, S&P has not so far required broad downgrades of the credit ratings of tech giants because of this.

More worrying is the reliance of these financing arrangements on future revenue growth.

SoftBank borrows to invest in OpenAI; model companies such as OpenAI and Anthropic lock in compute years in advance; cloud computing and data center companies then borrow to buy chips and build infrastructure. These companies' debts are not borne by the same entity, but their investment returns all depend to varying degrees on the AI market being able to keep growing.

If future revenue falls short of expectations, model companies may struggle to honor the huge compute contracts they have signed and be forced to cut new purchases and investment; data center operators' financing capacity may also be affected, and investment institutions may face the dual pressure of asset depreciation and rising financing costs.

Trouble at one company may gradually be transmitted to other companies along funding and contractual relationships.

What Masayoshi Son is facing is precisely one of the difficult problems in this bold bet.

He believes OpenAI will continue to appreciate, and believes AI will ultimately create wealth far exceeding today's investment.

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