Alibaba will sell debut bond on Thursday

Wed Nov 19, 2014 5:32pm EST
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By Danielle Robinson and John Balassi

NEW YORK (IFR) - Chinese e-commerce giant Alibaba will sell its first-ever bond on Thursday, a jumbo trade expected to be around $8 billion in size that comes just two months after the company's record IPO.

It is looking to sell up to seven tranches, including five fixed-rate bonds ranging from three to 20-year maturities and two floating-rate notes with three and five-year maturities, which bankers and investors expect to be the most sought after of the year.

"Alibaba will have no problem attracting the attention of every investor base around the world," said one bond syndicate manager.

"They've done a good job of coming out with enough spread over what would be fair value to make sure they get the size done."

Alibaba, highly rated for a Chinese corporate at A1/A+/A+, has been sounding out investors this week in Asia, Europe and the US and is believed to have a huge order book already in place before officially starting the marketing phase in Asia overnight.

Two market sources said initial indications of interest were at US$10bn.

Alibaba's high Single A ratings will help as the company pitches itself as a comparable to blue-chip names like Oracle, Amazon and Cisco, rather than its lower-rated Chinese internet peers Tencent Holdings and Baidu.

Active bookrunners Morgan Stanley, Citigroup, Deutsche Bank and JP Morgan are gauging investor interest at initial price thoughts of 80bp over Treasuries for the three-year fixed, 110bp over for the five-year, 135bp over for the seven-year, 150bp over for the 10-year and 175bp over for the 20-year.   Continued...

Jack Ma, Executive Chairman of Alibaba Group, speaks at the WSJD Live conference in Laguna Beach, California October 27, 2014.  REUTERS/Lucy Nicholson