SoftBank Group Corp. has set the terms for a ¥260 billion ($1.6 billion) subordinated bond offering, marking the highest coupon ever offered on its yen-denominated debt as the Japanese technology investment giant seeks to strengthen funding for its expanding artificial intelligence ambitions.

The bond sale, primarily targeted at retail investors, will carry a coupon rate of 5.12% during its initial five-year period. The rate is higher than the 4.97% coupon offered on SoftBank’s previous retail bond issuance in April 2026, reflecting both elevated market interest rates and the company's need to attract investor participation for a subordinated debt instrument.

The issuance forms part of SoftBank’s broader financing strategy as the group accelerates investments in artificial intelligence infrastructure, semiconductor technologies, and next-generation computing platforms. The company has significantly increased its AI-related commitments over the past year, including investments in large-scale data centers, AI model development, and strategic technology partnerships.

Subordinated bonds are considered riskier than senior debt because they rank below other creditors in the event of liquidation. To compensate investors for the additional risk, issuers generally offer higher coupon payments. SoftBank’s decision to offer a record coupon highlights the premium required to attract retail capital while maintaining flexibility in its capital structure.

The proceeds from the bond sale are expected to be used for general corporate purposes, including refinancing existing obligations and supporting ongoing investment initiatives. SoftBank has historically relied on a mix of bond issuances, asset monetization, and portfolio management to fund its investment activities through the Vision Fund ecosystem and direct strategic investments.

The offering also comes at a time when Japanese interest rates have gradually moved higher after years of ultra-loose monetary policy. As borrowing costs rise across the market, corporate issuers have increasingly been required to offer more attractive yields to secure investor demand.

Market participants will closely monitor the subscription response to the bond sale, as strong retail demand could provide further evidence of investor confidence in SoftBank’s long-term AI-focused growth strategy despite the group's historically volatile earnings profile and exposure to technology sector valuations.