Alibaba Group Holding raised US$5 billion from a multi-tranche dual-currency bond offering, the Chinese e-commerce giant said on Wednesday, an initiative that looks to enhance Hong Kong‘s role as an international financial centre.
Hangzhou-based Alibaba, owner of the South China Morning Post, concurrently issued US$2.65 billion in US dollar-denominated notes and 17 billion yuan (US$2.35 billion) in offshore yuan-denominated notes, following the firm’s announcement on Monday of a bond offering plan. Net proceeds are to be used for general corporate purposes, including repayment of offshore debt and share buy-backs.
The company’s latest bond offering reflects efforts by the mainland and Hong Kong to bolster the city’s financial standing, including its function as an offshore centre to trade yuan-denominated assets.
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Chinese Vice-Premier He Lifeng said at the Global Financial Leaders’ Investment Summit this week that Beijing will continue to back the city’s role as the offshore yuan hub, part of a long-term strategy outlined in China’s third plenum. The Communist Party‘s third plenum in July mapped out a wide range of measures that the country will focus on for the next five years and beyond.
Alibaba’s latest deal already represents the biggest corporate bond issue of its kind in the Asia-Pacific region this year, according to London Stock Exchange Group data. It also marks Alibaba’s return to the public dollar-bond market after its US$5 billion offering in 2021.
The company’s yuan-denominated bond offering was also the largest such corporate debt issue in Hong Kong.
“Hong Kong’s role as an offshore yuan centre will get stronger in the future,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International. “After all, Hong Kong is a financial centre and its connection with the mainland and the world [provides] great advantage to developing its role as a yuan hub. [The city] has the state’s support.”
A bird’s-eye view of Alibaba Group Holding’s headquarters in Hangzhou, the capital of eastern China’s Zhejiang province. Photo: AFP alt=A bird’s-eye view of Alibaba Group Holding’s headquarters in Hangzhou, the capital of eastern China’s Zhejiang province. Photo: AFP>
An analyst at a mainland bond rating agency, who declined to be named, said China has been working for years to create a vibrant “dim sum bond” market, with yuan-denominated bonds issued in Hong Kong. This would involve the Ministry of Finance and the local governments of Guangdong, Hainan and Shenzhen as the main bond issuers, followed by state-owned enterprises and other industrial entities.