Alibaba draws $46b worth demand for $7b bond sale

Photo: Reuters

Alibaba Group Holding Ltd. sold $7 billion bonds Wednesday in a deal that investors clamored for, ordering more than six times as many securities as were for sale.

The deal eclipsed China Evergrande Group’s $6.6 billion offering in June to become the biggest sale in Asia from a non-bank issuer, according to data compiled by Bloomberg. Eager investors were already flipping the bonds in the after market late Wednesday in New York. The offering’s 4.2 percent 30-year bond rose to 101.2 cents on the dollar at 6:13 p.m., up from an issue price of 99.8 cents.

“The market is screaming out for some high-quality issuers right now” such as Alibaba, Hayden Briscoe, head of Asia Pacific fixed income at UBS Asset Management in Hong Kong, said before the bond sale was concluded at the end of U.S. trading on Wednesday.

The Chinese e-commerce giant sold the notes in five parts, with maturities of 5.5, 10, 20, 30 and 40 years. Investors orders on the deal reached $46 billion, according to people familiar with the offering, who are not authorized to speak publicly and asked not to be identified.

Record Maturity

The longest portion of the offering, $1 billion of 4.4 percent 40-year bonds, yields 1.58 percentage point over comparable government debt. That’s down from early talk from underwriters of around 1.8 percent. It’s the longest maturity on record from a Chinese corporate issuer, according to  data compiled by Bloomberg.

“Alibaba can afford to pay a bit more for longer-dated funding,” Anthony Leung, director of Asia-Pacific credit research at Wells Fargo Securities LLC in Hong Kong, said before the final pricing of the deal.

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 U.S. dollar-denominated issue by any firm in Asia outside of Japan. It exchanged the notes for new debentures in 2015.

Morgan Stanley, Citigroup Inc., Credit Suisse Group AG, Goldman Sachs Group Inc. and JP Morgan Chase & Co. managed the sale.

Issuers from Asia outside of 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 93 basis points on Wednesday, up 17 basis points 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.

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.