Tencent returns to bond market with US$600 million issue

Web services operator finds popularity among professional investors after December offering

PUBLISHED : Thursday, 30 August, 2012, 12:00am
UPDATED : Thursday, 30 August, 2012, 3:17am

Tencent, China's biggest internet company, went back to the bond market yesterday with an issue of US$600 million in senior unsecured notes that professional investors quickly snapped up.

In a filing with the Hong Kong stock exchange, Tencent said it expected to raise net proceeds of US$594 million - after deducting underwriting fees, discounts, commissions and other expenses - that would be used for "general corporate purposes".

The 5.5-year notes, with a coupon of 3.375 per cent, were offered at a premium of 275 basis points over US Treasuries, which was tighter than the previously reported guidance of 300 basis points.

Tencent president Martin Lau Chi-ping said strong demand for the offering showed "investors continued to hold strong confidence in our business model and financial performance".

The notes, which will be listed in Hong Kong and will start trading on or about September 6, were oversubscribed, with a total book order of US$6.27 billion from 307 investor accounts. Credit rating agencies Moody's and Standard & Poor's rated the notes Baa1 and BBB-plus, respectively.

Forty per cent of the bonds were sold to buyers in the United States, 37 per cent in Asia and 23 per cent in Europe. Joint global co-ordinators for the bonds were Goldman Sachs, Deutsche Bank and Barclays. The three firms also joined Citigroup, Credit Suisse, JP Morgan and Australia and New Zealand Banking Group as joint bookrunners.

Shenzhen-based Tencent made its maiden international debt offering in December with US$600 million in five-year notes that were listed in Singapore. Total net proceeds from this issue reached US$592 million.

Founded in 1998, Tencent had 28.5 billion yuan (HK$34.8 billion) in total revenue last year. It operates popular web portals that provide mainland users with online games, social networking, instant messaging and other internet services.

"We remain firmly committed to maintaining our strong credit profile and investment-grade credit ratings," Tencent chief financial officer John Lo Shek-hon said.