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Alibaba $5 billion bond is back on

(ATF) Alibaba has announced a multi part bond offering on the back of strong quarterly earnings as debate raged over China’s regulation of the firm and the future of its founder Jack Ma.

It has unveiled price guidance for a 10-,20-,30- and 40-year bond issue which will give a spread of 130, 140, 150 and 160 basis points over US Treasuries in a deal that is expected to price later on Thursday during US market hours, according to a term sheet seen by Asia Times Financial.

The 20-year tranche is a sustainable bond which will finance or refinance, in whole or in part, one or more new or existing its existing eligible projects under Alibaba’s sustainable finance framework.

Alibaba revenue was 221.08 billion yuan ($34.24 billion) in the last quarter of 2020, a rise of 37% compared to the same quarter the year before, though the increase was helped by the inclusion of sales from Sun Art, a supermarket firm Alibaba bought in October.

Alibaba hailed the results as a success and the delayed international bond issue follows the attempts by the firm to address regulatory concerns in China. A filing for a four-part bond issue was made with the SEC on Tuesday February 2.

“China was the only major economy to achieve positive GDP growth last year. Thanks to the rapid recovery of China’s economy, Alibaba had another very healthy quarter,” said Daniel Zhang, chairman and chief executive of Alibaba in a statement about its results.

“We achieved another successful 11.11 Global Shopping Festival by stimulating consumption, satisfying consumer demands and supporting the business recovery of merchants in response to the impact of the pandemic. Our cloud computing business continues to expand market leadership and show strong growth, reflecting the massive potential of China’s nascent cloud-computing market as well as our years of investment in technology,” he said.

Maggie Wu, chief financial officer, said: “We delivered another solid quarter, with revenue growth of 37% year-over-year and adjusted EBITDA up 22% year-over-year, while our strong free cashflow enabled us to further invest in strategic areas.”

Decent earnings and a calmer supervisory backdrop in China should allow Alibaba to successfully prices its bond offering, analysts said.

“Alibaba is one of the fundamentally strong credits in the Asia dollar bond universe owing to its high profitability, steady cash flow generation and robust net cash position,” said a note from independent research firm CreditSights.

“Alibaba’s dollar bonds trade slightly tighter compared to its peers Tencent and Baidu, which we think is fair given its solid credit fundamentals,” it said while reiterating its Market perform recommendation for Alibaba’s bonds.

Asian borrowers issued record amounts of US dollar-denominated debt in January and a big deal from Alibaba will set February on course for another brisk month of issuance.

China International Capital Corporation, Citigroup, Credit Suisse, JPMorgan and Morgan Stanley underwriters to the bond deal.


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