Apollo in talks to nearly double SoftBank loan to $9B

Apollo Global Management ↘ 1.94% is in talks with SoftBank Group to nearly double the size of a loan backing the Japanese conglomerate's Vision Fund 2, as SoftBank works to finance a $64.6 billion commitment to OpenAI, Bloomberg reported on Thursday.bloomberg

The discussions would increase the net-asset-value loan to $9 billion from $5.4 billion, according to people familiar with the matter who asked not to be identified because the talks are private. The financing is secured by the assets held in Vision Fund 2, which has made more than 300 investments since inception and had more than $100 billion in committed capital as of February. Representatives for both Apollo and SoftBank declined to comment.investing+1

A Growing Web of Debt

Apollo first extended the NAV loan to Vision Fund 2 in 2021 and raised it by $900 million last year to $5.4 billion. NAV loans allow fund managers to borrow against portfolio assets without selling underlying investments, providing liquidity while preserving positions.finimize+1

The potential expansion comes on top of a mounting pile of SoftBank borrowing tied to its OpenAI stake, which will reach roughly 13% by October 1. SoftBank arranged a $40 billion bridge loan earlier this year to help fund the investment and said it repaid $25.9 billion of that amount on September 15. It has also secured an approximately $11.87 billion two-year bank loan and is considering $10 billion to $20 billion in new dollar and euro bond sales to retire the remaining bridge debt.startupfortune+1

Credit Markets Flash Warning Signs

The scale of SoftBank's borrowing has begun to unsettle credit markets. Five-year credit default swaps on SoftBank rose to about 384.6 basis points this week, the highest since 2023, according to data provider CMA cited by Bloomberg. The widening spread directly raises the cost of new bond issuance, effectively making the OpenAI bet more expensive to carry.startupfortune

The pressure intensified after OpenAI CEO Sam Altman told Fortune in an interview published September 12 that the company would not pursue an IPO before 2027, calling the current moment "ill-advised" given safety concerns. SoftBank shares fell sharply in Tokyo trading this week following Altman's remarks and broader calls from AI leaders, including Anthropic CEO Dario Amodei, to slow advanced model development. Morningstar analyst Dan Baker said SoftBank's stock slide "probably reflects the possibility that AI development may be slowed by regulators," a risk that threatens both the value of SoftBank's stake and the financing behind it.finance.yahoo+1