Tencent Holdings Ltd.has signed its biggest and cheapest ever dollar-denominated facility in the loan market, according to people familiar with the matter.
The Chinese social media giant’s $6.5 billion loan is the largest versus local peers Alibaba Group Holdings Ltd. and Baidu Inc., Bloomberg-compiled data show. The five-year facility pays an all-in pricing of 85 basis points via an interest margin of 80 basis points over Libor, said the people who are not authorized to speak publicly and asked not to be identified. The rate is also the lowest among its peers, according to data.
The club loan, which will be used for refinancing and general corporate purposes, drew nine lenders including Bank of America Corp. and Bank of China Hong Kong Ltd., the people said. The company was in talks for a $5 billion deal, Bloomberg earlier reported. Tencent didn’t immediately respond to an email request for comment.
Tencent’s facility is seen as a litmus test of lender appetite for high-grade companies in the wake of lower borrowing costs in Asia and political unrest gripping Hong Kong. Syndicated loan volume so far this year in the region excluding Japan is the lowest since 2013 while interest margins are at 2017 lows as of end-June, data compiled by Bloomberg show.
The leading gaming company posted quarterly revenue of 88.8 billion yuan ($12.4 billion), lagging the 93.4 billion yuan average estimate and spurring several analysts to cut price targets on the company. The disappointing growth came after rivals like ByteDance Inc. and a broader economic slowdown sapped advertising.