Chinese e-commerce giant Alibaba Group on Thursday wowed the markets with the largest bond sale of US dollar on record from an Asian firm, pricing its USD 8 billion Initial Public Offering (IPO) debut at levels that are even tighter some of the best-known issuers of the world.
The Chinese company amassed over USD 55 billion of orders for the six-tranche deal, which is among the world’s largest investment-grade bonds of the year.
Alibaba had hit the headlines in September this year after it made a successful USD 25 billion initial public offering (IPO) at New York Stock Exchange.
With the narrow pricing, the Chinese company comfortably managed to beat other higher-rated state-owned issuers and offer no compensation to the investors for the risks linked with the Chinese investments.
Kapstream Capital portfolio manager Raymond Lee said, “The pricing on Alibaba’s bonds did not reflect a China risk premium in our view, and was priced more like a US credit, given the solid demand from the US investor base and hype around the IPO.”
Kapstream Capital is Australia’s one of the largest fixed-income funds.
The Asian investors found the bonds of the Chinese firm expensive as they are familiar with the higher risk-adjusted premiums from the Chinese issuers.
A1/A+/A+ rated Alibaba was priced USD 1 billion of 1.625 percent three-year fixed-rate notes at 70bp over Treasuries. This was almost 40bp inside where the state-owned China National Petroleum Corp, with Aa3/AA-/A+ rating, had sold bonds of three-year just two days earlier.
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