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Baidu Sells $1 Billion of Bonds in Largest China Sale Since
USINFO | 2013-11-12 15:00
The senior unsecured notes were priced to yield 3.29 percent, or 1.9 percentage points over similar-maturity U.S. Treasuries, according to data compiled by Bloomberg. It’s the company’s first offering abroad since it issued $1.5 billion of debt in November. Average borrowing costs have surged for Chinese companies by 1.26 percentage points this year, compared to a 1.09 percentage-point jump in emerging-market corporate yields, JPMorgan Chase & Co. index data show.
The sale is China’s second benchmark issue since May as investors gauge the extent of the slowdown in the world’s second-largest economy. While Baidu has sufficient cash to fund its $1.9 billion acquisition of 91 Wireless as it seeks a greater share of the country’s mobile user market, the company went offshore for “tax efficient” financing, Moody’s Investors Service said yesterday in a report.
“The technology sector is considered more of a growth sector than a deep cyclical sector for China,” Michael Roche, an emerging-market strategist at broker-dealer Seaport Group LLC, said by phone from New York. “It’s still a growing field, compared to say metals or real estate, where a company would have had a more difficult time fulfilling their funding needs given the economic backdrop we have in China.”
Baidu, rated A3 by Moody’s, or four levels above junk, also sold five-year securities eight months ago in its debut offering, paying just 2.27 percent, or 1.6 percentage points over U.S. benchmarks.
