Alibaba Group Holding Ltd (NYSE:BABA) reportedly plans to sell U.S. dollar bonds sometime this month, leveraging its latest better-than-expected quarterly numbers and expected record sales from the upcoming Singles’ Day retail event on November 11. The Chinese retail giant is focusing on long-term maturities to meet its financial needs, reports Reuters, citing unnamed sources familiar with the plans.
Alibaba plans a second dollar bond sale
This would be Alibaba’s second international bond sale if it goes forward. In its debut dollar bond sale in 2014, the Chinese company sold an $8 billion six-tranche offering at a price that was in line with the world’s best-known companies back then. At the time, the company amassed orders of more than $55 billion for the deal, which was the largest investment-grade bond of the year.
JP Morgan, Morgan Stanley, Citigroup and Deutsche Bank were the active bookrunners then, while Goldman Sachs and Credit Suisse were the passive bookrunners. According to Thomson Reuters data, Alibaba’s outstanding notes are trading close to their highest spreads since their issue. The $700 million 4.5% 2034s is trading at 73bp over Treasuries.
Jim O’Shaughnessy: Fear Signals Created By The Reptilian Brain
ValueWalk's Raul Panganiban interviews Jim O’Shaughnessy, Chairman, Co-chief Investment Officer, and Portfolio Manager at O’Shaughnessy Asset Management. In this part, Jim discusses the fear and emotional signals created by the reptilian brain. Q1 2020 hedge fund letters, conferences and more That's very cool. For the factor to try to seek the reason why it works, Read More
Alibaba could announce the mandate for this year’s offering next week, while the pricing is expected to take place on November 23, Reuters says, citing sources familiar with the matter.
Alibaba’s bonds sale will come just weeks after Apple offered investors $7 billion six-part bonds at with maturities of two, three, five, seven, 10 and 30 years. As of now, there has been no information from Alibaba about another set of U.S. dollar bonds.
Singles Day lures more global brands
Meanwhile, Alibaba is preparing for its annual Singles Day, which is set for Nov. 11. In 2016, the event amassed sales of $17.8 billion, compared to $14.3 billion in 2015. The Singles Day transaction volume last year was even bigger than America’s Black Friday and Cyber Monday events combined. The event is also bigger than Amazon’s Prime Day.
This year, the event is expected to get even bigger as over 60,000 global brands are offering their products. Global names like Nike, Procter & Gamble, Bose, Gap, Zara, Adidas, Mac Cosmetics, Macy’s and Lululemon have significant presences on Alibaba’s Tmall platform, which is an online version of a shopping mall. Overall, the company is promising 15 million product listings from over 140,000 brands.
“The extension of the Singles’ Day event is similar to what has been happening in the U.S., where the influence of one-day shopping holidays is diminishing as retailers adopt a season-long approach to marketing and promotions,” Fung Global’s Managing Director Deborah Weinswig notes, according to CNBC.
Alibaba will hold its usual countdown celebration on Friday night, featuring singer Pharrell Williams.
In other Alibaba news, Daniel Loeb’s Third Point has increased its investment in Alibaba by about 50% in the third quarter. According to a regulatory filing on Thursday, Third Point acquired 2.1 million American depositary receipts of the Chinese firm that were worth about $1.1 billion as of September 30. At the end of the third quarter, Alibaba’s stock was the hedge fund firm’s second-biggest U.S. equity holding, according to Bloomberg.
In pre-market trading today, Alibaba shares were up slightly. Year to date, the stock is up almost 111%, while in the last three months, it is up almost 18%.