UPDATE 1-Tencent markets four-tranche US dollar bond, orders over US$10bn

2 min read
Emerging Markets, Asia

adds books and fair value estimates

Chinese tech giant Tencent Holdings is marketing a multi-billion 144A/Reg S offering of US dollar senior unsecured notes in four tranches.

Initial price guidance for a long five-year January 2026 tranche is Treasuries plus 175bp area. Guidance for 10-year, 30-year and 40-year tranches is Treasuries plus 200bp area, 220bp area and 240bp area, respectively.

Books topped US$10bn across the four tranches before noon, including US$1.14bn from the leads.

The bonds have expected ratings of A1/A+/A+, on par with the issuer.

The bonds will be issued off the company's US$20bn global MTN programme and will price as early as today during New York hours.

The size of the deal is likely to be up to US$6bn, matching the issuer's offshore debt issuance quota and making it the largest dollar bond deal from a Chinese issuer this year.

Research firm CreditSights sees fair value for the four tranches at 142bp, 152bp, 151bp and 166bp wide of Treasuries, respectively. It said it would add an extra 2.5bp if total issuance is between US$2bn and US$4bn, and add 5bp if it exceeds US$$4bn.

"Given the strong order books for the recent new Asian issuance, we think that there will be no new issue premium, and thus, the proposed Tencent multi-tranche deal is likely to be priced on the curve," writes CreditSights.

Meanwhile, ANZ sees fair value at 140bp, 160bp, 175bp and 195bp wide of Treasuries, respectively, which would offer a decent 25bp–35bp premium across the curve over like-rated Alibaba Group Holding and a discount of around 30bp to Baidu, which is rated 1–2 notches lower.

Proceeds from the deal will be used for refinancing and general corporate purposes.

Bank of America, HSBC, Morgan Stanley and Goldman Sachs are joint global coordinators. Bank of China (Hong Kong), Mizuho Securities, Barclays, Credit Suisse, Deutsche Bank, ICBC (Asia), JP Morgan and SPDB International are joint lead managers and joint bookrunners.

Tencent last tapped the bond market with a US$6bn five-tranche deal in April last year.