Alibaba Group Holding Ltd., China's largest e-commerce platform, has successfully priced a $5 billion dual-currency bond deal aimed at funding general corporate needs, including offshore debt repayment and share repurchases. The offering, which marks Alibaba's first public dollar bond issuance since 2021, consists of a mix of U.S.-dollar and yuan-denominated notes, reflecting the company's strategic efforts to bolster its financial position amid a shifting market landscape.
On Wednesday, Alibaba confirmed the pricing of $2.65 billion in U.S. dollar-denominated notes and 17 billion yuan ($2.35 billion) in offshore yuan-denominated notes. The offering is expected to close later this month, with the dollar notes finalizing on November 26 and the yuan notes on November 28, pending standard regulatory approvals and conditions. The company plans to use the proceeds for general corporate purposes, including reducing offshore debt obligations and executing share buybacks.
The dual-currency transaction underscores Alibaba's commitment to maintaining liquidity while managing debt and enhancing investor returns. Sources familiar with the transaction stated that the dollar notes will be issued in three parts, with the longest, a 30-year bond, priced at 1.05 percentage points above comparable U.S. Treasuries. The order book for the dollar issuance surpassed $18 billion, highlighting robust investor demand despite ongoing concerns about China's economic recovery and regulatory scrutiny of its tech sector.
The offshore yuan tranche, valued at approximately 18 billion yuan, spans four maturity periods. While the exact breakdown of the yuan tranches has not been disclosed, Bloomberg previously reported that the deal would include 3.5-year, 5-year, 10-year, and 20-year notes.
Alibaba's return to the public bond market after a hiatus aligns with broader market trends. Chinese companies have increased their dollar-bond issuance following new economic stimulus measures introduced by Beijing. The Federal Reserve's recent easing of interest rates in the United States has further created favorable market conditions for dollar-denominated bonds. In October, dollar-note issuance by Chinese firms more than doubled compared to the previous year, supported by historically low spreads in the secondary market.
The timing of this issuance coincides with challenges in Alibaba's core business segments. Last week, the company reported sluggish growth in its Chinese e-commerce unit for the quarter ending September 30, weighing on overall results. Gains in Alibaba's international and cloud computing divisions, however, helped partially offset domestic slowdowns. Analysts believe that diversifying revenue streams and focusing on growth areas outside traditional e-commerce will be crucial for Alibaba as it navigates an evolving economic and regulatory landscape.
