Alibaba Group debt sale draws US$38b in orders at its peak

Alibaba Group Holding (9988) drew robust orders for a US$5 billion bond sale, demonstrating investor confidence in the company's long-term prospects amid easing tensions with Chinese regulators, Bloomberg reports.

The four-tranche offer received more than US$38 billion in orders at the peak, according to people with knowledge of the matter. The notes comprising 10-year, 20-year, 30-year and 40-year maturities were priced at 30 basis points to 40 basis points lower than initial guidance, as measured in yields above comparable Treasuries, said the people, who aren’t authorized to speak publicly.

The new dollar debt sale is the biggest in Asia since a US$6 billion issuance by rival Tencent Holdings Ltd. in May. It comes amid growing expectations that Jack Ma’s tech empire may have avoided the worst-case scenarios – which had ranged from a government-led takeover to a break-up of his companies – after the billionaire entrepreneur briefly returned to public sight last month and as Ant Group began its lengthy overhaul process. Washington’s decision to drop deliberations of an investment ban on the firm and Alibaba’s consensus-beating quarterly sales performance also helped ease concerns about its future amid a regulatory crackdown.

Alibaba’s existing dollar notes and its shares gained Thursday after Bloomberg News reported that affiliate Ant Group and Chinese regulators agreed on a restructuring plan that will turn Jack Ma’s fintech giant into a financial holding company. While this would make Ant subject to capital requirements similar to those for banks, analysts say the agreement suggests it’s now less likely to have to spin off portions of its businesses.

Meanwhile, Reuters reported that Ant may hive off its consumer data operations, a concession to regulators that may enable the company to revive plans for an initial public offering that had been abruptly halted in November.

Alibaba owns roughly a third of of Ant and Chief Executive Officer Daniel Zhang told analysts on Tuesday that the company was unable to assess the impact of the company’s ongoing restructuring on its business, though he added that only “a very small percentage” of Ant’s credit plans are used to make payments on its market places. The online retailer, which is facing its own antitrust investigation, has set up a special taskforce to conduct internal reviews and is actively communicating with antitrust regulators on complying with their requirements, Zhang said.