Business / Corporate

Alibaba planning $7 billion bond sale in year's biggest Asian deal

Bloomberg

Alibaba Group Holding Ltd. plans to sell $7 billion in bonds in the biggest dollar bond sale this year by an Asian corporate issuer.

The Chinese e-commerce giant is offering the notes in five parts, with maturities of 5.5, 10, 20, 30 and 40 years, according to people familiar with the offering, who are not authorized to speak publicly and asked not to be identified.

The bond deal would eclipse China Evergrande Group’s $6.6 billion offering in June, the biggest so far this year in Asia from a nonbank issuer, according to data compiled by Bloomberg.

“The market is screaming out for some high-quality issuers right now” such as Alibaba, said Hayden Briscoe, head of Asia Pacific fixed income at UBS Asset Management in Hong Kong. “For the Alibaba deal, you will also have a huge bid coming out of the global emerging-market corporate books. Right now they are quite starved for good-quality names.”

China’s second-biggest company by market value, founded by billionaire Jack Ma, raised $8 billion in its first bond sale in 2014, which remains the largest dollar-denominated issue by any firm in Asia outside of Japan. It exchanged the notes for new debentures in 2015.

The new offering is being managed by Morgan Stanley, Citigroup Inc., Credit Suisse Group AG, Goldman Sachs Group Inc. and JP Morgan Chase & Co., according to the people.

The 40-year tranche it’s offering on the new deal may be the longest-maturity dollar bond from a Chinese corporate issuer, according to Bloomberg-compiled data.

“Alibaba can afford to pay a bit more for longer-dated funding,” said Anthony Leung, director of Asia-Pacific credit research at Wells Fargo Securities LLC in Hong Kong. “This issuance is likely to be long-end heavy and we expect the size to be near the top end of market estimates.”

Issuers from Asia ex-Japan have already sold more than $293 billion in dollar notes so far this year, an all-time high, compared with about $186 billion for all of 2016, according to data compiled by Bloomberg.

Alibaba had $1.3 billion of bonds due on Nov. 28, Bloomberg data show. It obtained a $5.15 billion five-year revolving credit facility in April.

The spread on Hangzhou-based firm’s $2.23 billion of 2024 notes was at 98 basis points on Wednesday, 17 basis points up from the record low reached last month. Its bonds still trade wider than those of U.S. peers such as EBay Inc., which has a lower rating from S&P Global Ratings.

The new bond sale comes after Alibaba struck a $2.9 billion deal earlier this month to buy a slice of China’s largest hypermart chain Sun Art Retail Group Ltd. to pit it against Wal-Mart Stores Inc. in the world’s largest retail market.