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Alibaba will sell debut bond on Thursday

Thursday, November 20, 2014 - 06:40
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Chinese e-commerce giant Alibaba will sell its first-ever bond on Thursday, a jumbo trade expected to be around US$8bn in size that comes just two months after the company's record IPO.

[NEW YORK] Chinese e-commerce giant Alibaba will sell its first-ever bond on Thursday, a jumbo trade expected to be around US$8bn in size that comes just two months after the company's record IPO.

It is looking to sell up to seven tranches, including five fixed-rate bonds ranging from three to 20-year maturities and two floating-rate notes with three and five-year maturities.

Alibaba, which has been sounding out investors this week in Asia, Europe and the US for what will be one of the most sought-after trades of the year, announced the deal on Wednesday.

Active bookrunners Morgan Stanley, Citigroup, Deutsche Bank and JP Morgan are gauging investor interest at initial price thoughts of 80bp over Treasuries for the three-year fixed, 110bp over for the five-year, 135bp over for the seven-year, 150bp over for the 10-year and 175bp over for the 20-year.

The bookrunners will start driving momentum in Asian business time on Thursday, before moving into Europe and pricing in New York on Thursday afternoon. "We heard they already have US$4 to US$5 billion interest out of Asia," one US-based investor told IFR.

Alibaba's single A ratings will help as the company pitches itself as a comparable to blue-chip names like Oracle, Amazon and Cisco, rather than its lower-rated Chinese internet peers Tencent Holdings and Baidu.

Oracle's 2.25 per cent October 2019 bonds are trading at a G-spread of around 66bp, some 44bp inside the IPTs on Alibaba's five-year tranche.

But pricing will likely be ratcheted in sharply on the deal.

Proceeds will repay an existing US$8bn syndicated term loan facility and for general corporate purpose.

Credit Suisse and Goldman Sachs are passive bookrunners.

REUTERS