Baidu sees strong demand in $ 1 billion bond issue despite China’s regulatory concerns

HONG KONG, Aug. 19 (Reuters) – Baidu Inc (9888.HK) has raised $ 1 billion in US dollar two-tranche durable bonds, trading on better-than-expected terms amid strong demand and despite concerns about China’s regulatory crackdown on the technology sector.

It was the first major debt fundraiser by a Chinese tech company since the last wave of regulatory action that began in July, and its success should give other issuers confidence that there is still significant interest. global investors for Chinese transactions, bankers said.

Its 5.5-year bond tranche raised $ 300 million and the 10-year tranche raised $ 700 million, according to a company statement.

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Baidu‘s dominance in the Chinese research market has supported demand, and the end price was significantly cheaper than when it was first reported to investors on Wednesday. Investor demand has reached more than $ 5 billion, according to two sources with direct knowledge of the matter.

“The environment has been very noisy in the tech industry. But Baidu has managed to overcome this and the market volatility has been more pronounced in stocks than in the credit market,” said one of the sources who declined to be identified by discussing private information.

Baidu, which plans to use the proceeds to repay debt and fund ESG-related projects, did not immediately respond to a request for comment.

The shorter-dated bond was valued at US Treasuries plus 83 basis points against an initial forecast of plus 115 basis points, while the longer-dated issue was valued at US Treasury bonds plus 113 basis points compared to an initial forecast of over 150 basis points.

In its prospectus for the deal, Baidu noted that it was not clear whether new Chinese rules requiring companies that plan to register overseas be subject to review by the Cyberspace Administration. China had similar implications for companies already listed overseas that intend to make further stock or debt offerings.

“We cannot predict the impact of the draft measures,” he said.

Chinese companies have raised $ 121.2 billion in U.S. dollar debt financing so far in 2021, according to Dealogic data, slightly below the $ 126.6 billion raised in the same period. last year.

Chinese officials have upended their old laissez-faire approach to the tech industry, launching a series of antitrust investigations, imposing fines and introducing new regulations. New rules were released this week aimed at tackling anti-competitive behavior and the processing of data by businesses.

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Reporting by Scott Murdoch in Hong Kong; Editing by Edwina Gibbs

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