Tencent Holdings Ltd. sold US$5 billion in bonds last week, in 3 tenors spread over 4 tranches. This was the A2-rated Chinese Internet company’s biggest U.S. dollar offering and its first debt issue since February 2015 when a total of $2.1 billion of bonds was priced. Tencent’s first foray into the international debt capital markets was in 2014, when it sold $2.5 billion.
The bonds’ 5-, 10- and 20-year fixed-rate tranches priced at 65 bps, 105 bps, and 105 bps respectively above U.S. Treasuries, compared with the initial price guidance of around 95 bps, 130 bps and 135 bps. There was also a 5-year floating-rate notes tranche priced at 60.5 bps over 3-month Libor.
Warmly received by investors, with orders of more than $41 billion across all tranches but skewed toward the 10-year portion, the bonds rallied on initial trading. Spreads on all four tranches narrowed by 1.5-6 bps when the bonds became free-to-trade.