Alibaba prepares record bond deal, s off follow-on roadshow, Beijing Infrastr...

郑丽颜

Alibaba preparesrecord bond deal, Autohome kicks off follow-on roadshow, Beijing Infrastructureprices $1b bond

  Alibaba never does anything in half measures and, having already completed the world's biggest IPO, the group is now preparing to launch Asia's largest ever bond offering. Roadshows will begin on Monday for a debut dollar-denominated 144a transaction, which could raise up to $8 billion.

        The A1/A+/A+-rated group has mandated the same banks, which executed its $8 billion syndicated loan earlier this year – Citigroup, Deutsche Bank, JPMorgan and Morgan Stanley, plus Credit Suisse and Goldman Sachs. Co managers will be BNP Paribas, DBS, HSBC, ING and Mizuho.

        The roadshow team has been split in two, with CFO Maggie Wu leading presentations in Hong Kong on November 17, followed by Singapore on November 18 and London on November 19. A second team led by senior vice-president, Michael Yao, will be in Boston on Monday then New York on Tuesday and Wednesday.

        Investors will be keen to hear the group's financial strategy from Wu who recently took up the helm as CFO after co-founder Joe Tsai became executive vice chairman. The Chinese ecommerce giant has plenty of room to take on debt since it runs a net cash position and the main question will be whether it can achieve the same kind of pricing premium as it has for its equity.

        Alibaba's share price has soared since it listed in mid-September at $68 per share. At Thursday's close in New York, the stock was trading at $114.8, up 1.7 times in the space of two months.

        With a market capitalisation of $283 billion it is now China's largest listed company ahead of China Mobile on $249.8 billion. It is also one of its most expensive – trading on a consensus p/e ratio of 52.8 times 2015 earnings.

        Alibaba has opened up a huge premium to its nearest comparables Tencent and Baidu, which are respectively valued at 30 and 27 times 2015 earnings.

        Both companies have dollar-denominated bonds outstanding, although Alibaba will almost certainly price through them, not least because it has a two notch higher rating from both Moody's and Standard & Poor's.

        Baidu's 3.5% 2022 bonds are currently being traded on a bid-offer spread of 138bp/133bp over 10-year Treasuries, while its 2.75% 2019 bonds are bid at 105bp over five-year Treasuries.

        Tencent's 3.375% 2019 bonds are at trading at 130bp/125bp over five-year Treasuries.