China’s Baidu launches U.S. dollar bond amid regulatory uncertainty at home

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HONG KONG — Chinese language web big Baidu Inc is tapping debt markets with a two-tranche, U.S. greenback sustainability bond in a deal that would take a look at world investor urge for food for China tech belongings as Beijing cranks up regulatory scrutiny.

The search firm on Wednesday launched a 5.5 12 months and 10-year U.S. greenback mounted fee senior unsecured sustainable notes transaction. It didn’t instantly say how a lot it aimed to lift through the issuance.

Baidu has indicated to traders the 5.5 12 months tranche will likely be priced round U.S. Treasuries plus 115 foundation factors, whereas the 10-year bond will likely be round U.S. Treasuries plus 150 foundation factors, in response to a time period sheet reviewed by Reuters.

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It mentioned it meant to make use of the proceeds of the bonds to pay down present debt and fund environmental, social and company governance (ESG) associated initiatives throughout the agency.

The agency mandated Financial institution of America, Goldman Sachs and JP Morgan to guide the transaction.

Chinese language corporations have raised $121.2 billion in U.S greenback debt funding thus far in 2021, in response to Dealogic information, barely beneath the $126.6 billion raised throughout the identical interval final 12 months.

“The present investor sentiment is just not that nice on Chinese language tech sector as a result of regulatory crackdown, however Baidu’s initiatives within the AI (synthetic intelligence) area ought to drive its subsequent part of development, and the market appears to haven’t paid sufficient consideration to that facet of Baidu but,” mentioned LightStream Analysis analyst Shifara Samsudeen, who publishes on the Smartkarma platform.

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In its prospectus for the deal lodged with the U.S. Securities and Change Fee (SEC), Baidu acknowledged the impression of China’s regulatory crackdown on the tech sector is just not but totally identified.

In July, China mentioned corporations with over a million prospects must be reviewed by the Our on-line world Administration of China (CAC) earlier than finishing up listings abroad https://www.reuters.com/world/china/china-widens-clampdown-overseas-listings-with-pre-ipo-review-firms-with-large-2021-07-10.

“The draft measures stay unclear on whether or not the related necessities will likely be relevant to corporations which have been listed in america and intend to conduct additional fairness or debt choices, equivalent to us. We can’t predict the impression of the draft measures,” Baidu mentioned within the prospectus.

On Tuesday, Chinese language regulators revealed new guidelines aimed on the China tech sector to deal with anti-competitive conduct and corporations’ dealing with of information. https://www.reuters.com/enterprise/media-telecom/china-issues-draft-rules-banning-unfair-competition-internet-sector-2021-08-17 (Reporting by Scott Murdoch in Hong Kong; Modifying by Kenneth Maxwell)