“According to people familiar with the matter, Apollo Global Management is in talks with SoftBank Group about increasing a loan from $5.4 billion to $9.0 billion to help the Japanese company finance its investment in OpenAI. The people said the financing is backed by assets from SoftBank’s Vision Fund 2, but it has not yet been finalized. Because the discussions are private, the people requested anonymity. Representatives for Apollo and SoftBank declined to comment. In 2021, Apollo issued what is known as a net asset value (NAV) loan to SoftBank’s venture capital fund, and last year increased its size by $900 million to $5.4 billion. NAV loans are backed by fund assets to help private equity firms raise cash.”

SoftBank has become one of the world’s largest AI investors and is using its borrowings to drive related initiatives, making it a focus of outside attention. As the costs of insuring its debt to prevent credit risk rise—this week, credit default swaps (CDS) climbed to a three-year high. This reflects, amid a broader backdrop of growing concerns about AI safety, that risk worries are also intensifying. The company also held an investor meeting in New York this week to assess interest in a potential overseas high-yield bond (junk-bond) offering. People familiar with the matter previously said the deal could raise $10 billion to $20 billion. Since its inception, Vision Fund 2 has made more than 300 investments, and it has also continued to increase its funding for OpenAI recently.

SoftBank has committed to invest $64.6 billion in OpenAI. Its CEO, Sam Altman, recently said the long-awaited initial public offering (IPO) is still being prepared, but will not happen this year because some investors had expected it to list this year. As the company focuses on addressing security issues, the listing has been pushed back to 2027. SoftBank has been using its holdings to boost liquidity; in August, it raised $10 billion from lenders including Apollo through a loan secured by its OpenAI equity. As of February, Vision Fund 2 has accumulated more than $100 billion in committed capital. Its largest investors include billionaire founder Masayoshi Son and SoftBank itself.

Apollo is considering raising the loan it originally planned to provide to SoftBank’s Vision Fund 2 from $5.4 billion to $9 billion. This money would give SoftBank more cash and continue funding its large-scale investment in OpenAI.

These loans are called NAV loans: they are not backed by the assets of a single company or individual as collateral, but instead by a basket of investment assets held by Vision Fund 2. In simple terms, SoftBank treats the investment positions it holds in the fund as collateral and borrows money from Apollo without having to sell those equity holdings immediately.

The market is paying attention because SoftBank is raising funds through multiple channels, including NAV loans, borrowing against its OpenAI stock via collateral, and possibly issuing high-yield bonds. This reflects that it is actively betting on AI and OpenAI, but it also means leverage and funding needs are increasing.

The article mentions that CDS spreads are rising, meaning the cost for insuring against the risk of default on SoftBank’s debt has increased. This indicates that some investors are becoming more sensitive to uncertainties such as SoftBank’s debt burden, the time horizon for returns on AI investments, and the delay of OpenAI’s IPO. This does not necessarily mean SoftBank will have credit problems, but it shows the market is demanding higher risk compensation.

The key points are: SoftBank wants to retain its exposure to AI and OpenAI equity while using these assets to borrow more funds; but if the value of the pledged assets falls and financing costs continue to rise, its financial pressure could also increase.