HONG KONG -- Alibaba Group Holding is set to raise up to $8 billion this month in its first offshore bond sale since 2017 even as the company comes under unprecedented regulatory pressure in China.
According to three people familiar with its plans, China's largest e-commerce company is set to market at least $5 billion in bonds of varying durations that would be fixed after further discussion with prospective investors.
The eventual size and pricing of the offering will shed light on investor concerns amid an anti-monopoly probe launched on Dec. 24 by China's State Administration of Market Regulation. The agency also twice last month imposed the maximum fine of 500,000 yuan ($77,000) on Alibaba in relation to other investigations.
Alibaba has lost nearly a quarter of its market value in New York since early November when the mega initial public offering of its affiliate Ant Group was halted at the last minute by Beijing after Jack Ma, founder of the two companies, gave a speech attacking financial regulators.
"We believe investor appetite for Alibaba debt will be strong," one of the people said. "Of course there will be questions on what are the likely outcomes from the regulatory curbs on Ma's companies. But few in the region can match Alibaba in terms of scale and innovation and that remains a key selling plank."
A spokesman for Alibaba declined to comment. The bond sale was first reported by Reuters.
This will be Alibaba's third dollar bond sale. It first raised a record $8 billion in 2014 shortly after its IPO in New York and raised another $7 billion in 2017.
The latter sale was broken into five sections, with bond durations of 5.5, 10, 20, 30 and 40 years. Bids for the debt exceeded $45 billion and allowed the company to issue the notes at a lower interest rate than initially expected.
The funds raised will be used to fund expansion and also repay debt maturing later this year, the people familiar said. The company, which had $60 billion in cash equivalents and short-term investments as of Sept. 30, has two notes worth a combined $1.5 billion coming due on Nov. 28, according to Capital IQ.
In the quarter ended Sept. 30, it had free cash flow of $6 billion. However, the company has been investing in startups as well as pouring money into its own expansion in China and abroad to fend off mounting competition.
Additional reporting by Nikki Sun.