Investor demand for $ 5bn Alibaba bond deal unaffected by regulatory issues By Reuters


© Reuters.

By Scott Murdoch HONG KONG (Reuters) – Alibaba (NYSE 🙂 Group Holdings said it had raised $ 5 billion when it finalized its mega US dollar bond deal on Friday as investors bypassed the ongoing regulatory scrutiny of the company in China. Prices were set tighter than the company initially noted when its initial price guide was released on Thursday, indicating strong demand to buy the e-commerce giant’s debt despite an antitrust investigation into the company. The $ 5 billion was raised in four tranches of debt at 10, 20, 30 and 40 years. “The demand was extremely strong throughout the book,” said a source with direct knowledge who could not be named because she was not authorized to speak to the media. The source added that investors showed no concern about the growing official scrutiny facing Alibaba and founder Jack Ma’s business empire in mainland China. Alibaba had indicated that it would use the money to help pay off offshore debt and finance future acquisitions and potential investments in “complementary businesses.” The 10-year bond raised $ 1.5 billion and was traded in 10-year US Treasuries plus 100 basis points, compared to the initial range of 130 basis points above the benchmark rate. A 20-year tranche, Alibaba’s first sustainable bond that was marked in 20-year US Treasuries plus 140 basis points, raised $ 1 billion at 100 basis points above the benchmark. Two other tranches of a 30- and 40-year bond raised $ 2.5 billion at rates 30 basis points tighter than initially set. The decision to adjust prices by 30 to 40 basis points, twice the usual amount of initial prices for US investment grade bonds, was driven by strong demand, the source said.

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