Carlos Barria | Reuters
An employee walks past the Alibaba logo during a
media tour organized by government officials at the company’s
headquarters outside of Hangzhou, Zhejiang province, China.
Chinese e-commerce giant Alibaba
will sell its first-ever bond on Thursday, a jumbo trade expected to be
around US$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."
Read MoreHedge funds ditch Apple for AbbVie and Alibaba
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 book-runners 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.
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."
Read MoreHedge funds ditch Apple for AbbVie and Alibaba
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 book-runners 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.
Read More Alibaba hires banks to debut dollar bond: Sources
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.
Read MoreHedge funds join the Alibaba bandwagon
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 US$8 billion syndicated term loan facility and for general corporate purpose.
Credit Suisse and Goldman Sachs are passive book-runners.
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.
Read MoreHedge funds join the Alibaba bandwagon
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 US$8 billion syndicated term loan facility and for general corporate purpose.
Credit Suisse and Goldman Sachs are passive book-runners.
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