Tencent is marketing bonds that may raise up to $4.5bn

Tencent Holdings began marketing dollar and yuan bonds in an offering that could raise as much as $4.5 billion, people familiar with the matter said, an upward shift from initial thinking following discussions with investors.

The Chinese technology and mobile gaming giant set initial price guidance for the proposed 10-year and 20-year dollar bonds at around 80 and 90 basis points above US Treasuries, respectively, according to a person familiar with the matter. It’s also seeking to sell 10-year and 30-year offshore yuan-denominated notes around 2.95% and 3.55%, the person said.

Tencent’s proposed dollar tranches drew orders exceeding $3 billion by mid-morning Tuesday, while its offshore yuan portions attracted more than 20.5 billion yuan ($3 billion), the person said.

The debt securities could be priced as early as Tuesday.

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The offering comes after Beijing’s recent decision to allow some top insurers to buy dim sum bonds via an expanded southbound investment program, stoking domestic appetite for yuan-denominated notes issued outside the mainland.

The firm has secured regulatory approval to issue as much as $4.5 billion in offshore debt, though it doesn’t need to use the full amount and the final size of the offering could change, the people added.

Proceeds from the offering would be mainly for refinancing and general corporate purposes, such as developing AI products and services, the people said.

Tencent didn’t immediately respond to a request for comment.

If successfully priced, the deal would be Tencent’s first dollar bond issuance since 2021, and its second-ever dim sum bond sale, following its debut offering last year. It could also be the company’s largest bond sale since its $6 billion offering in 2020.

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Tencent has $3.5 billion of debt including bilateral loans maturing this year, and $2.8 billion due next year, according to people who dialed into a deal roadshow on Monday, citing company managers.

It has no public offshore bonds coming due in 2026, but does have a $2.5 billion note due in 2028, Bloomberg-compiled data show.

Last month, Tencent reported its slowest revenue growth in six quarters, underscoring the urgency of its pivot to artificial intelligence. The firm has vowed to at least double AI investments to more than 36 billion yuan ($5.3 billion) this year, but it trails peers like ByteDance and Alibaba Group Holding in both user adoption and advances in developing large language models.

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