Alibaba prices 5-tranche $7 billion dollar bond amid strong demand

HONG KONG – Chinese internet giant Alibaba Group Holding Ltd has priced a $7 billion (5.22 billion pounds) multi-tranche bond issue after a blowout response allowed the borrower to tighten pricing across all maturities, according to a term sheet seen by Reuters.

The tranches for the 5.5-, 10-, 20-, 30- and 40-year maturities were priced at 73, 108, 118, 138 and 158 basis points (bps) over US Treasuries.

This compares with the initial price guidance was indicated at around 100, 125-130, 140, 160 and 180 bps respectively.

The bonds priced were $700 million 2.800 percent bonds due 2023, $2.55 billion 3.400 percent bonds due 2027, $1 billion 4.000 percent bonds due 2037, $1.75 billion 4.200 percent bonds due 2047 and $1 billion 4.400 percent bonds due 2057.

Investors expected demand to be robust, while Thomson Reuters publication IFR reported orders of nearly $40 billion.

“Alibaba is a fundamentally sound company with a dominant market position and solid positive cash flows,” said Alaa Bushehri, portfolio manager for emerging market debt at BNP Paribas Asset Management.

“We expect this issue to do well with interest also coming from global (more specifically U.S.) investment grade accounts.”

He added that there were technical factors which would also contribute to the issue doing well, since supply of bonds from the technology sector had been relatively slim with just over $10 billion issuance in the last three years.

Morgan Stanley, Citigroup, Credit Suisse, Goldman Sachs and JPMorgan are the bookrunners for the bond, which is rated A1/A+/A+ (Moody‘s/S&P/Fitch), the same ratings as the issuer.