Caixin
Aug 18, 2021 03:40 PM
FINANCE

Baidu Forges Ahead With Dollar Bond Sale Amid Tech Crackdown, Sources Say

The proposed bond sale would be Baidu’s first return to the dollar bond market since October. Photo: Bloomberg
The proposed bond sale would be Baidu’s first return to the dollar bond market since October. Photo: Bloomberg

(Bloomberg) — Baidu Inc. is marketing a two-part sustainable dollar bond deal, according to people familiar with the matter, marking the first major global debt sale by a Chinese tech firm since Beijing escalated a crackdown on private enterprise.

The Internet search giant, an investment-grade issuer, is looking to price five-and-a-half-year and 10-year notes about 115 basis points and 150 basis points, respectively, above comparable Treasurys, said the people, who asked not to be identified because they’re not authorized to speak about it publicly. A Baidu dollar bond maturing in 2026 was trading Wednesday at a spread of 83 basis points, according to Bloomberg-compiled data.

Baidu Chart

The firm earlier received a $1 billion bond sale quota from the National Development and Reform Commission, China’s top economic planning agency. Borrowers can choose whether or not to use the full amount.

The proposed sale would be Baidu’s first return to the dollar bond market since October and follow mobile phone maker Xiaomi Corp.’s $1.2 billion offering in July that also included a green note. Planning to use the proceeds for general corporate purposes and debt repayment, Baidu is now spending heavily to reposition itself as an artificial intelligence company with use cases in everything from ride-hailing to smart speakers and the cloud.

“There will be some level of risk premium from the China tech crackdowns that Baidu will have to pay,” said Kaveh Namazie, senior credit analyst at Australia & New Zealand Banking Group. “Baidu historically has a fair amount of demand from the U.S., and they may see some reduction there given recent headlines from last two months. But for a company like Baidu, they will still have sufficient demand to do the deal.”

Offshore bonds sold by China’s major tech firms have enjoyed robust demand in recent years, with strong support from both local and U.S. buyers. Xiaomi’s offering in July, for example, attracted more than $7 billion of orders, even as regulators moved to increase scrutiny of the industry.

Contact editor Michael Bellart (michaelbellart@caixin.com)

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