Huawei’s Unusual $1.5 Billion Loan Involves Only Chinese Banks

(Bloomberg) -- Huawei Technologies Co. plans to raise the equivalent of $1.5 billion from a group of Chinese lenders, people familiar with the matter said, the company’s first major debt financing since U.S. authorities restricted its access to key suppliers in May.

It would also be the first time on record that Huawei has tapped the offshore syndicated loan market without the help of at least one international bank, according to data compiled by Bloomberg. The Shenzhen-based company is close to wrapping up the Hong Kong dollar-denominated loan, though final signoffs are still pending and details could change, the people said.

The world’s largest provider of networking gear has become a central player in China’s conflicts with the U.S. over trade and key technologies, and investors have been watching the company closely in recent weeks for clues about its access to funding. While Donald Trump said last month that he would ease some curbs on Huawei, the tech giant remains on a U.S. blacklist and will likely continue to face significant restraints on its access to American suppliers.

Some foreign banks could be abstaining from making new loans to Huawei because of ongoing uncertainty surrounding the U.S. curbs, according to Cindy Lam, an analyst at Bloomberg Intelligence in Hong Kong. At the same time, if Huawei can secure funding from Chinese lenders, it won’t need to tap foreign ones, she said.

Huawei didn’t immediately reply to a request for comment.

The all-in pricing on offer for the five-year tranche on Huawei’s loan is 130 basis points over the Hong Kong interbank offered rate and 160 basis points for the seven-year tranche, people familiar with the matter said, asking not to be identified because they aren’t authorized to speak publicly. The five-year loan pricing is higher than a similar tenor facility in September.

--With assistance from Gao Yuan.

To contact the reporters on this story: Carol Zhong in Hong Kong at yzhong71@bloomberg.net;Annie Lee in Hong Kong at olee42@bloomberg.net

To contact the editors responsible for this story: Neha D'silva at ndsilva1@bloomberg.net, Michael Patterson

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