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 Alibaba, which this week logged US$9 billion of sales on a single
day, will kick off a roadshow in Boston and Hong Kong on Monday for
what will surely be one of the most sought-after bond offerings of
the year.
It hired Morgan Stanley, Citigroup, Deutsche Bank and JP Morgan to
arrange the meetings, which continue in New York and Singapore on
Tuesday and London on Wednesday.
"Everyone will want this," one market participant told IFR. "It's a
first-time borrower, it's high quality and it's a marquee name. This
is a great global story."
Founded by Jack Ma in the late 1990s, Alibaba Group has become a
powerhouse player in the global economy, highlighted by its stunning
results on China's Singles' Day on Tuesday.
It reported sales of 57.1 billion yuan (US$9.3 billion) on the day,
conceived as a response to Valentine's Day in the West and now akin
to Black Friday and Cyber Monday in the United States.
"What Alibaba as a company is doing is important and exciting for
global commerce," said Matthew Duch, senior portfolio manager at
Calvert Investments.
"They are tapping the holy grail of retail, the Chinese consumer."
Moody's has assigned an A1 credit rating to the proposed bond, which
will only increase the appeal of the deal for investors already
enamored with the company's success story.
"The overhang around Chinese companies is what can and can't be
trusted in the financials," said Duch. "Alibaba is going a long way
to build confidence and credibility in Chinese companies."
INVESTOR FAVORITE
Less than two months ago, Alibaba wowed the global markets with the
largest IPO of all time, a whopping US$25bn listing in New York that
sold at US$68 per share.
Its stock is up nearly 75% since then, closing at US$118.20 on
Wednesday - giving Alibaba Group a market capitalization of US$289
billion, even bigger than US retail giant Walmart.
"Alibaba has the potential to be equally popular in the bond market
as the equity market, but for very different reasons," said Scott
Kimball, senior portfolio manager at Taplin, Canida & Habacht.
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"The bond market is often very receptive to brand new, highly-rated
issuers."
Bankers told IFR that Alibaba is expected to sell about US$8 billion
of bonds, which would make it one of the five largest bond deals of
the year.
It is unusual for large publicly listed companies to undertake big
debt sales so soon after an IPO, which highlights Alibaba's appeal
as a gateway into the vast Chinese market.
"The fact that Alibaba is going to issue a large transaction on the
back of its highly successful IPO in the equity market will continue
the positive momentum and interest in the Chinese retail market,"
said Duch at Calvert.
Proceeds are expected to be used to repay an existing US$8 billion
syndicated term loan facility that has been fully drawn down, Fitch
Ratings said.
There tend to be much tighter restrictions attached to loans than to
bonds, meaning Alibaba should have even greater freedom in the
financing of any future expansion plans.
Ma, Alibaba Group's chairman and now one of the richest men in the
world, has indicated that he may seek an IPO for sister company
Alipay, an online payment platform, in 2015.
The new bond will also mark a significant success for the four banks
underwriting it, who were selected after what sources said was an
exceptionally competitive process.
(Reporting by Danielle Robinson; Additional reporting by Stephen
Lacey, Anthony Hughes and Anthony Rodriguez; Writing by Marc
Carnegie; Editing by Natalie Harrison)
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