Alibaba Group Holding Ltd (阿里巴巴) raised US$8 billion in its first sale of bonds at yields that were lower than originally offered after investors submitted orders of at least US$57 billion to the e-commerce company.
“The premium we see associated with Chinese companies is absent in this case,” said Dorian Garay, a New York-based money manager for the global investment-grade debt fund at ING Investment Management Co, in a telephone interview. “It feels like new-issue concession is non-existent.”
Alibaba’s debt offering adds to a banner year for corporate bonds with worldwide issuance of US$3.8 trillion on pace to exceed US$4 trillion for the first time. The Hangzhou, China-based company plans to use proceeds to refinance some credit agreements, according to a Nov. 13 statement.
The banks underwriting the biggest US dollar-denominated notes by an Asian company lowered the premium by as much as 0.27 percentage points on its longest-dated bond, according to a person with knowledge of the offering, who asked not to be identified because the details are private.
Alibaba sold the largest portions in equal US$2.25 billion offers of five and 10-year notes, according to data compiled by Bloomberg. The 2.5 percent, five-year notes sold at a yield of 95 basis points above similar-maturity Treasuries and the 3.6 percent, 10-year securities sold at a relative yield of 128 basis points, the data showed.
“The market welcomes emerging-market names that are highly rated, particularly out of Asian countries that are highly rated for emerging-market standards,” said Brigitte Posch, the London-based head of emerging-market corporate debt at Babson Capital Management LLC. “Certain sectors benefit from a worldwide audience given the global scale of their business.”
The notes yesterday were not free to trade in Asia as of 3:12pm in Hong Kong because final term sheets were not quite ready, said two people with knowledge of the matter, who asked not to be identified because the details are private.
In so-called gray market trading, which involves selling allocation rights on securities before they are deposited in a buyer’s account, the notes in most tranches, after rallying initially, had moved back to be in line with the spreads at which they priced. The 2034 bonds were an exception, quoted around the 146 basis point area, according to Australia & New Zealand Banking Group Ltd prices.
“You have to understand this sector,” said Arthur Lau, the Hong Kong-based head of Asia ex-Japan fixed income at PineBridge Investments.
“If you buy the 20-year bonds then you have to sit with the credit through multiple economic cycles. The information technology sector is growing fast in China, but it’s still evolving,” he said.
Debt of Chinese companies typically yield about 20 basis points to 50 basis points more than that of their US peers, said Anthony Leung, a Nomura Holdings Inc credit research analyst in Hong Kong, in a report this week. A basis point is 0.01 percent.
Alibaba also sold US$1.5 billion of 3.12 percent, seven-year notes, US$1 billion of 1.62 percent, three-year securities, US$700 million of 4.5 percent, 20-year bonds, and US$300 million of three-year floaters, Bloomberg data showed.
The company initially offered the 20-year bonds at a premium of 175 basis points above similar-maturity Treasuries, according to a person with knowledge with the offering.
The US$8 billion sale eclipsed a US$6.5 billion issue last month by Bank of China Ltd (中國銀行) to become the biggest US dollar-denominated offering by an Asian company.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last