Breaking Down Alibaba’s Third-Quarter Earnings
Alibaba May Plan to Issue $ 5 Billion in Bonds This Month
Alibaba Group Holding Ltd plans to raise at least $ 5 billion this month through the sale of USD-denominated bonds amid regulatory oversight of Jack Ma’s empire, four people familiar with the matter said..
According to one source, depending on the reaction of investors, revenue could be $ 8 billion, which the e-commerce leader is likely to spend on general corporate spending..
The fundraising will test investor sentiment towards Alibaba amid regulatory crackdowns on the company and its "daughter" The Financial Technology Ant Group. Chinese officials hit hard on business empire Jack Ma, as he publicly criticized the country‘s regulatory system in October, which led to the chain of events that led to the suspension of Ant Group’s $ 37 billion stock listing.
Jack Ma’s absence from public space has recently sparked rumors on social media about his whereabouts.
According to sources who declined to give their names because they were not authorized to communicate with the media, the plan for the sale of bonds, including the timing, has not yet been finally agreed and may be changed.
Following Ma’s speech, Chinese regulators launched antitrust investigations against Alibaba and ordered Fintech Ant to change its lending and other consumer finance lines, including setting up a holding company to meet capital requirements..
President of the U.S.A Donald Trump also heightened tensions by banning transactions with eight Chinese software applications, including Ant Group’s Alipay mobile payment app.
Chinese regulators are also scrutinizing Ant’s investments in dozens of companies and are considering whether to instruct the company to sell some of those investments, Reuters reports..
«Investors need Jack Ma to appear in public to instill confidence that the bond will be well received», – said an Asian credit analyst at a European bank who was not authorized to communicate with the media and therefore refused to be identified.
Alibaba, listed on the Hong Kong Stock Exchange (HKEX), rose 4% on Wednesday, compared with a 0.4% decline in the index. Share price fell 5.6% in the past three sessions.
Alibaba said last month it would increase the cost of its share buyback program from $ 6 billion to $ 10 billion..
According to Refinitiv, Alibaba’s international bond placement, if completed, will be the third for the tech group. Alibaba sold $ 8 billion in bonds in 2014 and $ 7 billion in 2017, according to the data..
Alibaba will join dozens of Asian companies in recent bond sale that have benefited from lower borrowing costs and greater liquidity in global markets in recent months.
USD 363.2 billion in USD bonds were sold in Asia last year, up 9% from a year earlier and the highest on record, according to Dealogic..
The terms of Alibaba’s offer were not immediately known. Two of the sources said that their term of office is likely to be 10 years and that marketing documents are likely to be available as early as next week..
One of the participants in the deal said that Alibaba wanted to use the release to inform the market that «in light of the latest regulatory scrutiny, the company is still doing well and is supported by some investors».
LightStream Research Analyst Oshadi Kumarasiri (Oshadhi Kumarasiri), who posts on Smartkarma, said Alibaba has about $ 10 billion in long-term debt maturing in November, so it makes sense to refinance it – even if time suggests it is about instilling confidence.
«However, I am more pragmatic and would still be concerned about going long on Alibaba due to the current stringent regulatory requirements.».