S&P Downgrades SoftBank's Rating to Negative, Saying $30 Billion Investment in OpenAI Could Harm Credit Quality

S&P Global has downgraded SoftBank Group’s credit outlook from stable to negative, citing SoftBank’s plan to invest an additional $30 billion in OpenAI, which could impair its liquidity and asset credit quality. This rating action has raised new concerns about the financial stability of this Japanese tech investment giant.

In a statement on Tuesday, S&P maintained SoftBank’s long-term issuer credit rating at “BB+”, but warned that if SoftBank fails to quickly take measures such as asset sales to alleviate pressure, the rating could be further downgraded. SoftBank responded positively to S&P’s maintenance of the long-term rating, with a spokesperson stating via email:

“S&P has fully considered our good track record in managing our financial fundamentals under pressure.”

This outlook downgrade directly impacts market perceptions of SoftBank’s debt risk. S&P explicitly pointed out that OpenAI is one of the weakest assets in SoftBank’s investment portfolio in terms of credit quality, and as the proportion of unlisted assets rises significantly, the overall liquidity of SoftBank’s investment portfolio will further deteriorate.

Additional Investment Plan: Three Tranches, Increasing Stake to 13%

Last month, SoftBank announced it would further increase its investment in OpenAI, which already received over $30 billion from SoftBank, with plans to add $3 billion in three tranches—each worth $1 billion—by the end of the year. After this investment, SoftBank’s stake in OpenAI will rise from about 11% in December last year to 13%.

S&P noted that, at that point, OpenAI’s share in SoftBank’s investment portfolio will be comparable to that of Arm Holdings, a UK chip design company. More notably, the proportion of SoftBank’s unlisted assets is expected to jump from an estimated 42% in December last year to over 50%, significantly weakening the overall liquidity of its investment portfolio.

Credit Concerns: High Risks for AI Startups, Increasing Liquidity Pressure

S&P expressed clear concerns about the credit quality of SoftBank’s AI investments. In its statement, it said:

“SoftBank’s investments in AI, including its stake in OpenAI, mostly involve early-stage startups and private companies, which face significant AI innovation risks and fierce competition.”

The additional investment could also strain SoftBank’s long-standing loan-to-value (LTV) metric used to measure debt repayment capacity. S&P indicated that if liquidity in SoftBank’s investment portfolio does not improve, downward pressure on its rating will persist, with asset sales being a key mitigation measure—but the timing of such sales remains uncertain.

Last year, SoftBank sold stakes in companies like T-Mobile US and NVIDIA to fund its founder Masayoshi Son’s AI bets.

Path to Rating Upgrade: IPOs and Asset Sales Are Key

S&P explicitly outlined the conditions for upgrading SoftBank’s outlook: improving investment portfolio liquidity through IPOs of assets including OpenAI, maintaining portfolio quality, and increasing loan-to-value ratios through asset sales.

Bloomberg Intelligence credit analyst Sharon Chen pointed out that S&P’s current negative outlook is not a credit watch, giving SoftBank some time—by selling assets to bring the adjusted LTV below 35%, and with OpenAI’s IPO as a necessary step to boost portfolio liquidity.

However, she also warned that rising geopolitical risks and potential AI bubbles could suppress tech asset valuations, putting continued pressure on LTV and possibly further delaying OpenAI’s already uncertain IPO timeline.

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