Tencent, Baidu sell record dim sum bonds for cheap funding
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Tencent Holdings has just priced its first bond in four years.
PHOTO: REUTERS
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HONG KONG – Chinese internet firms are raising a record amount of funds in Hong Kong’s dim sum bond market, as they look to secure cheap financing to power their artificial intelligence ambitions.
Tencent Holdings, which just priced its first bond in four years, and Baidu have together sold 23.4 billion yuan (S$4.2 billion) of offshore renminbi bonds in 2025, the largest tally for the sector ever.
Other companies are also sizing up the market, with food delivery company Meituan considering issuing such notes for the first time.
Dim sum bonds are bonds issued outside mainland China, usually in Hong Kong, but denominated in Chinese renminbi. Alibaba Group Holding, which recently raised about US$3.2 billion (S$4.1 billion) in the largest convertible bond offering of the year, priced 17 billion yuan of offshore renminbi debt in November 2024.
The surge in fund-raising activity comes at a time when Chinese tech companies are investing billions of dollars in artificial intelligence capabilities.
Total capital expenditure by major Chinese internet firms such as Alibaba, Tencent, Baidu and JD.com is set to hit US$32 billion in 2025, more than doubling from US$13 billion in 2023, according to a Bloomberg Intelligence report.
Offshore renminbi denominated bonds are attractive to these firms because of the lower borrowing costs they offer compared with notes in other currencies, along with the advantage of avoiding potential share dilution, according to Ms Meng Ting, senior Asia credit strategist at Australia & New Zealand Banking Group.
Three-year dollar bonds issued by Chinese investment-grade firms are yielding between 4 per cent and 5 per cent, while comparable yuan-denominated bonds offer yields of around 2 per cent, according to Ms Meng.
“This enables companies to save around 200 basis points on coupon payments,” she added.
Tencent offered a coupon rate of 2.1 per cent on its five-year dim sum bonds on Sept 16, which is about 150 basis points lower than the yield on US Treasury notes of the same tenor.
The interest from tech firms adds to an already hot dim sum bond market. Corporate issuers have sold a record US$49.6 billion of the notes so far in 2025, according to data compiled by Bloomberg. BLOOMBERG
