Chinese retail and tech major Alibaba raised $5bn via Asia’s largest bond deal this year yet. Below are the details of its issuance:
The SEC registered bonds have expected ratings of A1/A+/A inline with the issuer and received orders of over $30bn, 6x issue size. There was strong real money demand from insurers, pension funds, sovereign wealth funds and official public institutions, especially at the longer tenors as per IFR. Proceeds will be used for general corporate purposes, including working capital needs, repayment of offshore debt, and potential acquisitions of or investments in complementary businesses. The company is coming to market amid a week of blue chip issuances like
Apple, Altria, Boeing and
BP raising a combined $46bn in the high-grade primary markets. It also comes at a time when Alibaba has been subject to antitrust investigations by China’s regulation administration. The 20Y tranche is Alibaba’s first sustainable bond and saw the biggest tightening of all the new bonds issued. Projects under its sustainable finance framework can include green buildings, energy efficiency, renewable energy, more efficient packaging and Covid crisis response. “For an ESG bond, it is a little longer than investors are used to from the banks, but there’s not anything preventing you from doing that… Corporates have different motivations from the banks so there is no reason they can’t do a longer dated ESG bond”, said a banker.
