Tencent plans to raise $6.8b in dollar bond sale

Tencent last came to the dollar bond market in January last year, when it priced US$5 billion in a four-part offering. The spread over treasuries on those bonds has risen since pricing, with premium on its 10-year tranche up by about 35 basis points.
Tencent last came to the dollar bond market in January last year, when it priced US$5 billion in a four-part offering. The spread over treasuries on those bonds has risen since pricing, with premium on its 10-year tranche up by about 35 basis points.PHOTO: REUTERS

This could be biggest dollar bond offering in Asia excluding Japan so far this year

HONG KONG • Tencent Holdings is planning to raise around US$5 billion (S$6.8 billion) through a dollar bond sale today, according to people familiar with the matter.

China's social media leader received an issuance quota of US$6 billion from China's National Development and Reform Commission, said people who were not authorised to speak publicly and who asked not to be identified.

Once priced, this could become the biggest dollar bond offering in Asia excluding Japan so far this year, according to data compiled by Bloomberg. Tencent spokesman Jane Yip did not immediately respond to an e-mail and text queries about the bond.

The firm plans to use about US$3 billion of the new bond proceeds to retire maturing debt, including the US$2 billion notes that are due next month, a company executive said in an investor call yesterday.

It last came to the dollar bond market in January last year, when it priced US$5 billion in a four-part offering. The spread over treasuries on those bonds has risen since pricing, with premium on its 10-year tranche up by about 35 basis points.

Tencent is recovering from a bruising year of regulatory crackdowns as game approvals slowly resume. It missed the mark on its earnings in the December quarter by the most in a decade. To weather slowdowns in its core business and the economy, the owner of WeChat is spending billions to sustain growth, with investments in everything ranging from cloud to entertainment to retail.

Tencent's executives said during an earnings call last month that the company plans to continue to spend big for content acquisition and production as it locks horns with Alibaba Group Holding and iQiyi for viewer time.

The firm plans to use about US$3 billion of the new bond proceeds to retire maturing debt, including the US$2 billion notes that are due next month, a company executive said in an investor call yesterday.

It overhauled its structure last September to capture opportunities in what founder Pony Ma brands the emergence of an "industrial Internet". It set up a cloud and smart industries division to spearhead its investments in areas ranging from retail, connected cities and security to education, manufacturing and healthcare. The spending spree is diversifying its revenue make-up.

The company has hired Deutsche Bank, HSBC Holdings, Goldman Sachs Group and Morgan Stanley to arrange fixed-income investor calls from yesterday.

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A version of this article appeared in the print edition of The Straits Times on April 03, 2019, with the headline 'Tencent plans to raise $6.8b in dollar bond sale'. Print Edition | Subscribe