BEIJING: Tencent Holdings Ltd is considering raising about eight billion yuan (US$1.1bil) in its first bond sale in four years, according to sources.
Based on investor feedback so far, the yields for the Chinese Internet giant’s three-tranche offshore yuan bonds could tighten some 40 basis points to 50 basis points, the sources said.
If that were to happen, it would put the yields on Tencent’s five-year notes at about 2.1% to 2.2%.
That would be slightly lower than what traders are demanding to hold peers’ notes with similar maturities.
Both Alibaba Group Holding Ltd’s and Baidu Inc’s offshore yuan bonds with comparable tenors were yielding around 2.25% to 2.3% on Tuesday, according to Bloomberg-compiled data.
Tencent is looking to sell five-year, 10-year and 30-year offshore yuan denominated notes, with initial price guidance at 2.6%, 3% and 3.6% areas, according to another source.
The deal was slated to be priced yesterday, said the source.
Tencent didn’t immediately respond to an emailed request for comment.
If successful, it would be Tencent’s first-ever sale of dim sum notes and its first bond offering in any currency since April 2021, according to data compiled by Bloomberg.
The newly priced securities would add to Tencent’s existing US$17.75bil in outstanding notes.
Proceeds from the proposed senior unsecured bonds would be used for general corporate purposes, the source added.
Tencent has a US$1bil note due in January 2026 and a US$500mil security maturing in April next year, Bloomberg-compiled data showed.
The debt offering comes amid increased fundraising activity in China’s technology sector, as companies invest billions in artificial intelligence capabilities.
Total capital expenditure by major Chinese Internet firms such as Alibaba, Tencent, Baidu and JD.com Inc is set to hit US$32bil in 2025, more than doubling from US$13bil in 2023, according to a Bloomberg Intelligence report.
Alibaba raised about US$3.2bil just last week in the largest convertible bond offering of the year.
Meanwhile, Baidu recently raised 4.4 billion yuan (US$618mil) from a dim sum bond offering, following a 10 billion yuan issuance in March.
Chinese food delivery and retail services company Meituan is also considering a potential dim sum bond sale. — Bloomberg
