Alibaba to sell first ever bond...

By Danielle Robinson and John Balassi
NEW YORK (IFR) - Chinese e-commerce giant
Alibaba will sell its first-ever bond on Thursday,
a jumbo trade expected to be around $8 billion
in size that comes just two months after the
company's record IPO.
It is looking to sell up to seven tranches,
including five fixed-rate bonds ranging from
three to 20-year maturities and two floating-
rate notes with three and five-year maturities,
which bankers and investors expect to be the
most sought after of the year.
"Alibaba will have no problem attracting the
attention of every investor base around the
world," said one bond syndicate manager.
"They've done a good job of coming out with
enough spread over what would be fair value to
make sure they get the size done."
Alibaba, highly rated for a Chinese corporate at
A1/A+/A+, has been sounding out investors this
week in Asia, Europe and the US and is believed
to have a huge order book already in place
before officially starting the marketing phase in
Asia overnight.
Two market sources said initial indications of
interest were at US$10bn.
Alibaba's high Single A ratings will help as the
company pitches itself as a comparable to blue-
chip names like Oracle, Amazon and Cisco,
rather than its lower-rated Chinese internet
peers Tencent Holdings and Baidu.
Active bookrunners Morgan Stanley, Citigroup,
Deutsche Bank and JP Morgan are gauging
investor interest at initial price thoughts of
80bp over Treasuries for the three-year fixed,
110bp over for the five-year, 135bp over for
the seven-year, 150bp over for the 10-year and
175bp over for the 20-year.
Oracle's 2.25% October 2019 bonds are trading
at a G-spread of around 66bp, some 44bp inside
the IPTs on Alibaba's five-year tranche.
That gap will likely shrink as orders pour in
during Asian hours, before Europe weighs in
ahead of eventual pricing on Thursday afternoon
in the US.
Some investors are leaning towards Amazon as
the best comparable. Although eBay is closer to
Alibaba in terms of business type, eBay’s
spreads have widened about 30bp since it
announced its spin off of PayPal in September.
Amazon's 2.5% November 2022 bonds were
trading at a G-spread of 123bp on Wednesday,
versus 135bp initial price thoughts on Alibaba’s
seven-year tranche.
Amazon also has an outstanding 1.2%
November 2017 issue trading at around 57bp,
compared with an 80bp whispered level on
Alibaba’s three-year.
Proceeds will repay an existing $8 billion
syndicated term loan facility and for general
corporate purpose.
Credit Suisse and Goldman Sachs are passive
bookrunners.