Reports indicate that Chinese online retail giant Alibaba intends to float a dollar bond later this month. According to sources this will be announced next week while the price will be made public prior to the Thanksgiving holiday which falls on November 23. The sources further indicated that the long-term maturities are being eyed by the retailer.
This will be the second time in three years that Alibaba will be issuing a dollar bond. In 2014 Alibaba issued bonds worth $8 billion in six tranches in what at the time amounted to be the biggest bond offering by a firm based in Asia. The offering comprised of three-year bonds worth $1 billion going at the rate of 1.625% and floating-rate notes worth $300 million maturing on November 28.
Currently the outstanding notes of Alibaba are trading close to their tightest spreads from the time they were issued. Six months ago after getting the commitment of 13 banks Alibaba sealed a syndicated loan worth $5.15 billion. Last week China’s leading online retailer raised outlook after it beat forecasts with an increase in revenues of 61% in the second quarter. Since the year started shares of the e-commerce giant have appreciated by 111%.
In recent months Chinese spreads in the United States dollar bond market have declined and this has allowed the issuing of a sovereign bond worth $2 billion by the U.S. government. The planned bond issue by Alibaba comes in the wake of Apple surprising investors when it issued a bond on November 7 worth $7 billion of various maturities ranging between two and 30 years.
In its debut dollar bond three years ago, orders for Alibaba’s bond totalled $57 billion. Around 75% of the notes were taken up by investors from the United States. The active book runners in the issue were Morgan Stanley, JP Morgan, Deutsche Bank and Citigroup while the passive bookrunners were Goldman Sachs and Credit Suisse.
Alibaba’s planned bond offer comes in the wake of the online retailer breaking records on Single’s Day when sales of more than $25 billion were made in 24 hours. This was an increase of 39% compared to last year when the value of sales was $18 billion. The total number of transactions that Alibaba handled during the 24-hour event was 1.48 billion and over 777 million parcels were shipped. During the peak moment 256,000 transactions were being handled per second.