Tencent Holdings Ltd’s share price down, offers dollar-denominated bonds in two tranches

Tencent Holdings Ltd, the largest Internet company in Asia, intends to sell dollar-denominated bonds in two tranches after the company has recently launched a program, which allows it to raise up to $5 billion in bonds over the next year. According to people with knowledge of the matter, who asked not to be named because the issues were still not public, Tencent Holding Ltd and a couple of other companies are offering debt in the U.S. currency.

As reported by the Wall Street Journal, the company intends to sell benchmark-sized bonds with maturities of three and five years. However, it is not clear what amount Tencent is seeking to raise, but a benchmark-sized bond normally refers to at least 500 million dollars.

The term sheet seen by Wall Street Journal (WSJ) today, showed that Tencent is planning to set the coupon for the three-year bond at around 140 basis points above comparable US Treasuries, or approximately 2,3%. The company will also set the coupon for the five-year bond at about 185 basis points above comparable US Treasury yields, or around 3.57%, data by WSJ revealed.

The bonds sale is part of the companys strategy, which is intended to make Tencent more competitive and a worthy rival of Alibaba Group Holdings Ltd.

In addition, according to data compiled by JPMorgan Chase & Co. indexes, companies located in Asia – from China to India – have started offering notes after earnings on dollar bonds for Asias issuers, excluding Japan, decreased to 4.97% on April 14th.

The Singapore investment director of Eastspring Investments – Mr. David Lai commented the companys strategy for Bloomberg: “There is still ample liquidity in the market and there is pent-up demand given the lower issuance ahead of the Easter long weekend. Interest rates are still low so, if borrowers wait longer there will be even more uncertainty and rates could go up.”

One of the companys rivals – Sinochem Corp. is also offering debt in the U.S. currency, along with Korea Expressway Corp. and Kasikornbank Plc. Sinochem Corp. has been reported to be selling five-year bonds, which who offer a premium of 175 basis points over U.S. Treasuries.

Tencent Holdings Ltd lost 0.19% yesterday to settle at 524.50 Hong Kong dollars, marking a one-year change of +107.48%.