Tencent plans Asia's biggest dollar bond this year

Hong Kong

TENCENT Holdings Ltd is planning to raise around US$5 billion through a dollar bond sale on Wednesday, according to people familiar with the matter.

China's social media leader received an issuance quota of US$6 billion from China's National Development and Reform Commission, people who aren't authorised to speak publicly and asked not to be identified said. Once priced, this could become the biggest dollar bond offering in Asia excluding Japan so far this year, according to data compiled by Bloomberg. Tencent declined to comment in an emailed statement.

It plans to use about US$3 billion of the new bond proceeds to retire maturing debt, including the US$2 billion notes that are due in May, a company executive said in an investor call on Tuesday.

Tencent last came to the dollar bond market in January 2018 when it priced US$5 billion four-part offering. The spreads over treasuries on those bonds have risen since pricing, with premium on its 10-year tranche up by about 35 basis points.

Tencent is recovering from a bruising year of regulatory crackdowns as game approvals slowly resume. The company missed the mark on its earnings in the December quarter by most in a decade. To weather slowdowns in its core business and the economy, the owner of WeChat is spending billions to sustain growth with investments in everything from cloud and entertainment to retail.

Tencent's executives said during an earnings call in March that the company plans to continue to spend big for content acquirement and production as it locks horns with Alibaba Group Holding Ltd and iQiyi Inc for viewer time.

The WeChat operator overhauled its structure in September to capture opportunities in what founder Pony Ma brands the emergence of an "industrial internet". It set up a cloud and smart industries division to spearhead its investments in areas from retail, connected cities and security to education, manufacturing and healthcare.

The company has hired Deutsche Bank AG, HSBC Holdings Plc, Goldman Sachs Group Inc and Morgan Stanley to arrange fixed income investor calls from April 2. BLOOMBERG