Key points
- Tencent is considering raising approximately $1.1 billion through its first bond sale in four years.
- The sale will involve three tranches of offshore yuan-denominated bonds with maturities of 5 years, 10 years, and 30 years.
- Initial yield guidance suggests slightly lower yields than comparable bonds from Alibaba and Baidu.
- The offering reflects increased fundraising activity within China’s tech sector, driven by investments in AI.
Tencent Holdings Ltd., the Chinese internet giant, is poised to make its return to the bond market after a four-year hiatus. The company is reportedly planning to raise approximately 8 billion yuan ($1.1 billion) through its first-ever sale of dim sum bonds (offshore yuan-denominated bonds).
This move is part of a broader trend of increased fundraising within China’s technology sector, driven by substantial investments in artificial intelligence. The proposed sale consists of three tranches: five-year, ten-year, and thirty-year bonds, with initial price guidance suggesting yields slightly lower than those offered by competitors.
Based on preliminary investor feedback, Tencent anticipates yield tightening of 40-50 basis points. This could place the five-year bond yield at approximately 2.1%-2.2%, slightly below the 2.25%-2.3% yield currently observed for comparable bonds issued by Alibaba and Baidu. The pricing of Tencent’s bonds is expected as early as Tuesday.
The proceeds from this senior unsecured bond offering will be allocated to general corporate purposes, which could include managing upcoming debt maturities, including a $1 billion note due in January 2026 and a $500 million security maturing in April 2024.
This bond sale marks a significant milestone, representing Tencent’s first entry into the dim sum bond market and its first bond issuance in any currency since April 2021. The issuance will add to Tencent’s existing $17.75 billion in outstanding notes. The company has not yet publicly commented on the planned issuance.
The increased fundraising activity in China’s technology sector is a notable backdrop for Tencent’s move. A Bloomberg Intelligence report projects that major Chinese internet firms, including Tencent, Alibaba, Baidu, and JD.com, will collectively invest $32 billion in capital expenditure in 2025—a substantial increase from the $13 billion spent in 2023.
This surge in investment is largely driven by the ongoing race to advance artificial intelligence capabilities. Notable recent bond offerings from companies such as Alibaba and Baidu have also accompanied this increased investment activity.
