Xiaomi Seeks Up to $1 Billion in Dollar Bond Sale

Xiaomi Corp. sold $1.2 billion of debt through a dollar bond deal offered to global investors as Chinese technology companies face fresh scrutiny in an new era of tighter oversight from Beijing.

The smartphone giant’s sale included a $400 million 30-year green bond tranche in a rare sustainability offering from the nation’s tech firms. The other part of the sale was an $800 million 10-year bond. The borrower had received a sale quota of $1.2 billion from China’s National Development and Reform Commission, according to people familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.

Xiaomi’s latest dollar-denominated offering comes as Beijing moves to rein in some of the nation’s biggest tech firms. A rout in stocks from these firms deepened Wednesday after the internet regulator opened a security review of Didi Global Inc. and the country’s State Council said in a brief statement that rules for overseas listings would be reviewed and publicly traded companies will be accountable to keeping data secure.

Xiaomi’s offering sold at 165 basis points above comparable U.S. Treasuries for a 10-year dollar bond and at 220 basis points for a 30-year green bond. A Xiaomi public relations official didn’t provide comment Wednesday. The firm sold its debut deal in the dollar bond market with a $600 million note last year.

TenorInitial price guidance spreadFinal sales price spread
10-year200bps165bps ($800 million)
30-year260bps220bps ($400 million)

The company, which raised nearly $5 billion in 2020 from the sale of various securities, reported strong growth in its core smartphone business to start this year. But it’s looking beyond consumer electronics, in March unveiling a potential $10 billion foray into making electric cars. Xiaomi said that eligible projects for its green bond proceeds include clean transportation and renewable energy.

Xiaomi has made more than 40 types of energy-saving products, Australia and New Zealand Banking Group analysts including Owen Gallimore wrote in a note Wednesday.

They put fair value for the tech firm’s planned 10-year note at 145 basis points above Treasuries and the 30-year offering at 210 basis points. “We expect bonds would be well-supported post its removal from U.S. blacklist in May,” the analysts wrote. Xiaomi won a court ruling in March to halt a ban on receiving American investment as part of the U.S. Defense Department putting the firm on a list of companies with alleged links to China’s military.

©2021 Bloomberg L.P.

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