(Bloomberg) -- SoftBank Group Corp.'s ( SFTBY ) credit risk, as measured by its credit-default swaps, has risen to the highest level in nearly four years as concerns grow over AI-related funding and a potential large acquisition.
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SoftBank's five-year CDS stood at 432 basis points on Tuesday, the highest since early November 2022, data compiled by Bloomberg show. It has widened by more than 30 basis points since moving above 400 a week earlier.
US cloud computing services provider CoreWeave Inc.'s financial strains have put a spotlight on the mounting debt behind the AI investment boom. SoftBank is also under scrutiny as financing costs rise and it weighs an acquisition of Allied Universal.
Bloomberg Intelligence credit analyst Sharon Chen sees at least $6 billion of cash outflow from SoftBank in the year ending March 2027, with further AI investment adding to funding needs. SoftBank "would need to raise fresh funds for the deal," while its loan-to-value ratio could move toward its self-imposed 25% ceiling, she said in a note.
SoftBank Group shares have performed poorly of late, falling about 50% from a June high.
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