Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
China’s Tencent has started marketing its first bond sale in four years, joining other tech groups raising renminbi debt as they race to fund aggressive AI expansion plans.
Tencent, which runs Chinese superapp WeChat and operates the world’s biggest video game business, said on Tuesday it was planning to issue three tranches of so-called dim sum bonds. It did not specify the size.
JPMorgan, BofA Securities and Morgan Stanley will be arrangers under the proposed issuance.
Chinese technology groups have been rushing to invest in artificial intelligence and cloud computing after Beijing signalled renewed support for the sector at the beginning of the year.
Baidu, a Beijing-based tech rival to Google, last week issued a Rmb4.4bn ($618mn) bond maturing in 2029 after a Rmb10bn issuance in March.
Alibaba, China’s largest tech company, raised $3.2bn from a convertible bond offering last week. It had issued Rmb17bn of dim sum bonds in 2024.
The issuance would be Tencent’s first new debt offering since 2021. The proposed sale will be in three tranches maturing in 5, 10 and 30 years. Tencent reported revenues of Rmb660bn for 2024.
In recent years the length of tenors in renminbi debt has grown in a sign that the market has matured.
“Three years ago you wouldn’t be able to do a 10- or 30-year transaction in these currencies,” said a banker, who was not involved in the Tencent deal.
“This is a good time to be issuing ultra-long tenor in CNH,” they added.
The surge in dim sum bond issuance comes at a time when long-term bond yields in the developed world are under selling pressure from investor concerns over high government spending and inflation.
“[Companies are] not waiting around for US rates, especially at the long end, to come down,” the banker said.
The proposed issuance will not be registered under the US Securities Act and will only be available in offshore markets to non-US investors. It is common for dim sum bonds to be issued in this legal framework.
Dim sum bond issuance is on track for another record year, with an increasing number of foreign multinationals also looking to tap the market.
Issuing debt in Hong Kong gives companies more flexibility in how they deploy the funds as the city is not subject to China’s strict capital controls. Companies can convert funds raised into other currencies for international operations or redeploy capital on the mainland.
