Alibaba Casts Spell Over Bond Buyers

E-commerce giant Alibaba Group Holding Ltd. sold $7 billion in dollar bonds on Wednesday in the world’s largest corporate bond offering of the year.

Investors clamored to the sale, which drew $46 billion in demand, according to Bloomberg, citing people familiar with the offering.

The market is ravenous for yield, said an equity analyst focusing on China’s internet sector. “If you’re a China bond fund, buying an Alibaba bond may bail you out of the recent slump in domestic government bonds,” he told Caixin.

Chinese government-bond yields climbed above 4% last week, indicating the bond market rout hadn’t subsided after Beijing set sweeping new guidelines to regulate asset management products.

Alibaba’s latest bond issue, a five-part offering with yields ranging from 2.8% to 4.4% on maturities between 5 1/2 and 40 years, comes just three years after another mega debt offering by the company. The e-commerce group, which operates the Taobao and Tmall online marketplaces, raised $8 billion in 2014, the largest U.S. dollar bond offering by any company in Asia outside of Japan at the time.

Wednesday’s bond sale comes weeks after Alibaba agreed to buy a third of one of China’s leading hypermarket chains for $2.9 billion, marking one of its largest acquisitions. It also came as the company posted strong financial performance in its last reporting quarter. Alibaba’s profits were up 146% year-on-year in the third quarter of this year, according to its latest report.

Alibaba said it planned to use the proceeds from its latest bond sale for general corporate purposes.

Contact reporter Liu Xiao (liuxiao@caixin.com)