Alibaba receives $57bn of bond orders ahead of debut offering

Alibaba Group Holding has received $57bn of orders from investors ahead of its debut bond offering

The figure, which is seven times higher than the Chinese firm was said to be seeking, would allow underwriters to reduce proposed yields, sources were quoted as saying by Bloomberg.

According to the sources, the banks underwriting the offering have lowered the premium by as much as 0.25% on its longest-dated bond.

On 13 November, the Chinese e-commerce giant said it was initially planning to raise about $8bn to repay a loan and that it would use the proceeds from the bond sale to refinance a number of credit agreements.

The Hangzhou-based company is marketing three-year fixed-rate notes at about 70 basis points over similar-maturity Treasuries, five-year debentures at about 95 basis points and seven-year securities at about 115 basis points.

According to the sources, 10- and 20-year bonds are being offered at about 130 basis points and 150 basis points, respectively, while Alibaba is also selling three-year floating-rate notes, and abandoning plans to include five-year floaters.

An $8bn sale would dwarf a $6.5bn issue last month by Bank of China Ltd. to become the biggest dollar-denominated offering by an Asian company.

Ahead of Apple’s $17bn offering in April 2013, the largest corporate-bond sale ever at the time, investors put in orders for $50bn, while Verizon attracted buyers for almost $100bn before its record $49bn offering in September 2013.

Morgan Stanley, Citigroup, Deutsche Bank AG and JPMorgan Chase & Co. are managing Alibaba’s debt sale and the firm’s notes will be rated A+ by Standard & Poor’s and an equivalent A1 by Moody’s Investors Service.

The ratings “reflect Alibaba’s dominant position in China’s online shopping market,” Fitch Ratings, which also ranks the company A+, said on November 13.

“The ratings also benefit from Alibaba’s robust profitability and strong cash generation.”