Alibaba Raises USD 5Billion in Largest Debt Sale in 2021

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Alibaba Raises USD 5Billion in Largest Debt Sale in 2021

 Alibaba Raises USD 5Billion in Largest Debt Sale in 2021

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Summary

  • Alibaba debt sale attracts USD 38 billion worth of orders from investors.
  • Sales include bons of four different maturity periods.
  • Alibaba stocks recover after Ant Group agrees to restructure its business.

Alibaba Group Holding Ltd. has raised USD 5 billion in debt sale comprising four bonds of different maturity periods. The rush of orders from investors showed how highly they still value the Chinese tech giant. Investors had lined up USD 38 billion worth of orders for the bonds.

Each bond was of 10, 20, 30, and 40-year maturity periods. It was the largest dollar debt issuance in Asia this year. The bond sale came after the Chinese government stopped an IPO listing of Alibaba’s payment affiliate Ant Group in December which could have been the biggest IPO in recent history.

The decision is seen as a fallout of Jack Ma’s critical comments on the Chinese regulators during an industry event last year. He had criticised the rules that prevented tech companies from taking advantage of the favorable global markets. Officials had considered blocking foreign investors from investing in the company. Alibaba shares (NYSE: BABA) had seen a sharp turn after that episode.

However, the stocks have recovered after Ant Group agreed with the regulators to restructure its business. Alibaba bonds have risen significantly in value in recent months. Besides, its solid performance continued to attract global investors, one of the reasons why all major global credit rating agencies, including Moody's, Fitch, and S&P, have given it an A+.

The latest debt sale is Alibaba's first major dollar bond issuance since 2017, and 2014, when it raised USD 7 billion and USD 8 billion, respectively. Alibaba’s billionaire founder has remained away from public and industry gatherings for several months in 2020 before appearing a school event.

Commenting on the bond sale, some analysists said that Alibaba is trying to raise as much capital as possible while the environment is still favourable, hinting at the uncertainty over its relations with Chinese officials, who may create more problems for the company in the future.

In its most recent quarterly earnings, Alibaba posted a 37 per cent year-on-year gain in revenue, beating analysts’ forecasts. However, that figure was boosted by the inclusion of sales from supermarket chain Sun Art, without which Alibaba would have recorded one of its slowest rates of quarterly growth since the company’s IPO in 2014.

Alibaba shares were priced at USD 265.67 at close on Friday, down by 0.4 percent. In the quarter ended December 31, 2020, Alibaba posted a revenue growth of 37 percent to USD 33,883 million year-over-year and adjusted EBITDA was up 22 per cent year-over-year. Net income was USD 12,173 million.

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