Alibaba Sells $5 Billion of Bonds in Four-Part Offering

Alibaba Group Holding Ltd. raised $5 billion in the biggest dollar bond sale in Asia in eight months.

The Chinese e-commerce giant had received more than $38 billion in orders for the four-part deal at the peak, according to people with knowledge of the matter. The longest portion of the offering, a 40-year security, will yield 130 basis points more than U.S. Treasuries, said the people, who aren’t authorized to speak publicly and asked not to be identified.

Alibaba’s existing dollar notes and its shares rallied Thursday after Bloomberg News reported that affiliate Ant Group and Chinese regulators agreed on a restructuring plan that will turn Jack Ma’s fintech giant into a financial holding company. Reuters reported that Ant may hive off its consumer data operations, a concession to regulators that may enable the company to revive plans for an initial public offering that had been abruptly halted by regulators in November. Alibaba owns about a third of of Ant.

The $5 billion offering is the biggest corporate dollar note deal in Asia since a $6 billion issuance from Tencent Holdings Ltd. in May. Alibaba was originally aiming to raise at least $5 billion via a debt sale that could’ve been increased to $8 billion depending on the reception, Bloomberg reported in early January. Investors had wondered then whether the company could pull off the deal as founder Ma hadn’t been seen in public since his Internet empire was hit with growing antitrust scrutiny.

Read a TOPLive Transcript on Alibaba’s Third-Quarter Results

The company resumed the debt plans after reporting a 37% increase in quarterly revenue that beat analysts’ expectations, giving it a much-needed boost amid the regulatory crackdown. Beijing in November torpedoed affiliate Ant’s record IPO and began an investigation into the online retailer, fueling uncertainty over the future of Ma’s tech empire. But the billionaire entrepreneur’s brief return to public view in January signaled that worst-case scenarios may be less likely.

The firm raised cash partly for general corporate purposes, including working capital needs, repayment of offshore debt, and potential acquisitions of or investments in complementary businesses, according to the people familiar with the deal. The 20-year tranche of Alibaba’s new offering is its first sustainability bond.

The company couldn’t be reached for comment.

Alibaba’s dollar bonds have enjoyed a strong rebound since a selloff in China’s offshore investment grade notes at the beginning of the year. Spreads on the firm’s 3.4% note due 2027 were indicated at about 95 basis points over Treasuries on Wednesday, some 40 basis points tighter than its January high, the latest Bloomberg-compiled data show.

TenorInitial Price GuidanceFinal Price GuidanceSpread
$1.5b 10yr+130bps area+105bps area (+/-5)+100bps
$1b 20yr+140bps area+105bps area (+/-5)+100bps
$1.5b 30yr+150bps area+125bps area (+/-5)+120bps
$1b 40yr+160bps area+135bps area (+/-5)+130bps

©2021 Bloomberg L.P.

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