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Investors Shrug off Tech Crackdown Concern to Buy Baidu Green Bond

Two-tranche sustainability bond from internet giant sells for cheaper than had been expected, signalling limited impact of tech crackdown

A logo of Baidu is seen during the World Internet Conference in Wuzhen, Zhejiang province, China, in November 2020. File photo: Aly Song, Reuters.

 

(AF) Chinese internet giant Baidu has sold a $1 billion green bond at a lower price than expected, despite a recent tightening of technology regulations by the authorities in Beijing that has sent jitters through China’s markets.

The Beijing-based company issued a two-tranche, US dollar sustainability bond, its first environment, social and governance (ESG) transaction. A 5.5-year tranche bond raised $300 million and the 10-year tranche secured $700 million, a company statement said.

The shorter dated bond was priced at US Treasuries plus 83 basis points, while the longer dated issuance was at US Treasuries plus 113 basis points. Initial price guidance given to investors was for premia of 115 basis points and 150 basis points, respectively, according to a term sheet reviewed by Reuters.

In its prospectus for the deal lodged with the US Securities and Exchange Commission (SEC), Baidu acknowledged the impact of China’s regulatory crackdown on the tech sector is not yet fully known.

Measures ‘Unclear’

In July, China said companies with more than one million customers would have to be reviewed by the Cyberspace Administration of China (CAC) before carrying out listings overseas.

“The draft measures remain unclear on whether the relevant requirements will be applicable to companies that have been listed in the United States and intend to conduct further equity or debt offerings, such as us. We cannot predict the impact of the draft measures,” Baidu said in the prospectus.

On Tuesday, Chinese regulators published new rules aimed at the China tech sector to tackle anti-competitive behaviour and companies’ handling of data.

Baidu said it intended to use the proceeds to pay down debt and fund ESG-related projects within the firm.

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

 

  • Mark McCord, Reuters

 

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Mark McCord

Mark McCord is a financial journalist with more than three decades experience writing and editing at global news wires including Bloomberg and AFP, as well as daily newspapers in Hong Kong, Sydney and Melbourne. He has covered some of the biggest breaking news events in recent years including the Enron scandal, the New York terrorist attacks and the Iraq War. He is based in the UK. You can tweet to Mark at @MarkMcC64371550.

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