Chinese multinational technology company Alibaba Group drew robust orders for a $5 billion worth bond sale, highlighting the confidence of global investors in founder Jack Ma’s eCommerce giant amid a regulatory crackdown on his empire.
The latest international bond offering is Alibaba’s third, according to data from Refinitiv, a global provider of financial market data and infrastructure.
As per the reliable source, several sovereign wealth funds were among the buyers, along with high profile US long-only funds. The demand was “extremely strong” across the various maturity-tranches.
The company did not respond immediately to a request for comment about the rate of over-subscription or the nature of its investors.
Alibaba has the needed permission from the National Development and Reform Commission (NDRC), China’s central economic planner, to issue the bonds, the source said, giving investors confidence the regulators were not cracking down too heavily on the company.
“Ant Group seems to be reaching some kind of progress and Jack Ma was out in public, so there was a sense that the clouds are clearing,” according to a source.
The $5 billion will be raised in four tranches of 10-, 20-, 30- and 40-year debt. Alibaba decided to tighten pricing by 30 to 40 basis points, double the usual amount from initial pricing for US investment-grade bonds on strong demand, as per the final terms.
“Alibaba bonds have been well received in the market, with pricing having tightened significantly from its initial guidance. Approval of Ant’s restructuring plan has reduced uncertainty over the regulatory environment, which contributed to a greater appetite for Alibaba’s new issuance,” commented Chang Wei Liang, a macro strategist at DBS Bank in Singapore.
Alibaba has further noted that the money will be used to help pay down offshore debt and finance possible potential acquisitions and investments in “complementary companies.”