Tencent Holdings raises $4.2 billion in its second major bond deal in a year

Tencent Holdings

Tencent has raised over $4 billion today in its second major bond deal in less than a year as global investors were enticed by its attractive pricing and overlooked a regulatory crackdown on China’s tech giants.

Asia’s most valuable company said in a statement it raised $500 million in a 10-year tranche, $900 million in 20-year debt, $1.75 billion in 30 year and $1 billion in 40-year debt.

Final orders for the dollar-denominated bonds were worth $21 billion when the books closed early Friday during US trading hours, according to two sources with direct knowledge of the matter.

The enthusiastic response contrasted with investor jitters around some state-owned Chinese issuers this week as the delayed release of China Huarong Asset Management’s annual earnings prompted concerns over its ability to repay offshore debt.

Tencent Holdings declined to comment on the demand for its bonds. The sources could not be named as the information had not yet been made public.

“The book ballooned after the US opened … they’ll rush in like there’s no tomorrow if you price it a little bit wider,” said a Hong Kong based investor who participated but could not be named due to confidentiality constraints.

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The bond pricing was set at 25 basis points to 35 basis points lower than the initial price guidance delivered to potential investors when the deal was launched on Thursday.

The 10-year tranche was priced at 130 basis points above US Treasuries, and the 20 year was set at 150 basis points.

Pricing for the 30-year tranche was 155 basis points and the 40 year was 165 basis points above their benchmark lending rate.

In comparison, Alibaba Group paid between 35 to 50 basis points less than Tencent for cash over the same tenures when it issued $5 billion worth of debt in February.

China’s tech giants are facing an unprecedented regulatory crackdown due to concerns that they have built market power that stifles competition, misused consumer data and violated consumer rights.

FALLING SHARE PRICE

Tencent’s share price has fallen 18.3% from its January peak so far this year on the back of tighter regulations potentially hurting its growth prospects. Still, it boasts a market capitalisation of about $765 billion, the most for a listed Asian company.

It raised $6 billion in May last year, when it also issued 40-year debt for the first time.

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The team at Platform Executive hope you have enjoyed the ‘Tencent Holdings raises $4.2 billion in its second major bond deal in a year‘ article. Translation from English to a growing list of other languages via Google AI Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Scott Murdoch in Hong Kong and Andrew Galbraith in Shanghai.

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