"SoftBank Group has trimmed the size of a margin loan it is trying to raise against its OpenAI stake to as little as $6bn, down from the $10bn it originally pitched, after several creditors balked at the valuation, Bloomberg reported on Friday."
"Margin loans against listed shares are a standard treasury tool. Margin loans against private-company stakes, even very large ones, are less so, and pricing them depends on a creditor's confidence that the underlying valuation will hold under stress and that recourse is meaningful if it does not."
"OpenAI's $852bn post-money valuation, struck in March's primary round, is recent and large; lenders SoftBank's original $10bn margin-loan ask against it were already conservative on advance rates, with terms reflecting a substantial haircut. The further downsizing suggests the haircut they are willing to apply has widened."
"The original pitch carried an indicative margin of around 425 basis points over SOFR, which would put the borrowing rate near 7.9% at current rates. Pricing has not been re-disclosed; the original pitch carried an indicative margin of around 425 basis points over SOFR, which would put the borrowing rate near 7.9% at current rates."
SoftBank Group reduced the size of a margin loan it is trying to raise against its OpenAI stake to as little as $6bn from an original $10bn. Creditors balked at the valuation used for collateral, prompting bankers to walk lenders through a smaller transaction. Discussions continue and the final size could change again. The original indicative margin was about 425 basis points over SOFR, implying a borrowing rate near 7.9% at current rates. Margin loans against listed shares are common, but loans against private-company stakes require lenders to believe the valuation will hold under stress and that recourse is meaningful if it does not. The $852bn post-money valuation from March is recent and large, and the downsizing suggests lenders are applying a wider haircut.
Read at TNW | Openai
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