Investors are starting to wonder if Alibaba Group Holding can pull out a giant dollar bond in the coming weeks, given the uncertainty surrounding co-founder Jack Ma and the Trump administration’s crackdown on Chinese companies.
The potential sale of up to $ 8 billion in offshore debt was expected as early as this week; However, a marketing memorandum has yet to be received by potential investors, according to people familiar with the matter, who requested not to be identified because they are not authorized to speak publicly. A spokesperson for Alibaba did not immediately comment on the progress of the sale.
This silence makes investors wonder if the e-commerce giant will make a sale at an increasingly difficult time. Reports of a possible ban on U.S. investments this week also prompted spreads on some Alibaba dollar notes to reach their highest level in six months, according to prices compiled by Bloomberg. And with President-elect Joe Biden in a few days, there is good reason to wait until his Chinese policy becomes clear.
“If I were the underwriter, I would wait for the Biden administration to start and maybe take a more thoughtful tone with China,” said Geof Marshall, who heads Signature Global’s fixed income team. Asset Management of CI Global Asset Management, which has approximately C $ 30 billion ($ 24 billion) under management.
The Trump administration has taken several steps against Chinese companies, including banning apps from Alibaba Ant Group subsidiary and Tencent Holdings. US officials have deliberated but ultimately decided not to ban US investments in Alibaba and Tencent, removing a cloud of uncertainty over Asia’s two largest companies, Bloomberg reported earlier Thursday. Spreads on Alibaba’s dollar bonds tightened as much as 8 basis points on Thursday morning, according to credit traders.
A debt sale of this magnitude would have been a show of strength for the company, signaling the confidence of global investors and reaffirming a key funding channel for the company. The global debt supply was pegged at at least $ 5 billion, but could have raised as much as $ 8 billion depending on the reception, Bloomberg reported previously. This would match Alibaba’s record-breaking debut in 2014, the largest sale of offshore bonds by a Chinese issuer.
Mr. Ma has not been seen in public since his internet empire was hit by growing antitrust crackdown and the suspension of the $ 35 billion Ant Group IPO, as he lambasted regulators for s ” being too risk-focused and stifling innovation. Its absence from public view could deter potential investors already worried about the storm that has ravaged one of China’s most powerful companies.
“At the moment, this is not something we would participate in given the uncertainty surrounding the actions of the Chinese regulator in this sector, the recent criticisms by Jack Ma of the Chinese bureaucratic system and how the government will react to it. “said Alejandro Arevalo, Head of EM Fixed Income at Jupiter Asset Management. “There are too many unknowns.”
Ant’s planned IPO – believed to be the largest on record in the world – had been scrapped and government regulators sent investigators to its flagship e-commerce company.
Speculation about Mr. Ma’s whereabouts escalated after the country’s most prominent billionaire missed a recent recording of his own TV show, though Alibaba attributed his absence to ‘conflicting schedules’ . This has led some to draw parallels with other fallen tycoons like Wu Xiaohui of Insurance Group Anbang and Xiao Jianhua of Group Tomorrow, whose disappearances preceded the bursting of their corporate empires.
These concerns are exaggerated, according to a person familiar with the case, explaining that Mr. Ma himself has decided to stay out of public view. The billionaire is cooperating with Beijing’s investigations into Alibaba as well as a government directive to mitigate online speculation about the investigation, the person added.
If Alibaba proceeds to market the bonds, the company may still be able to generate “considerable demand”, according to Bloomberg Intelligence analysts Robert Schiffman and Suborna Panja, adding that Alibaba’s credit profile “has never been so strong “.
“There is a price for everything. It will have to be juicy but Alibaba is here to stay,” said Georges Gedeon, director of investments at Antler Capital Partners in London. “China will never destroy its tech champion.”
(Except for the title, this story was not edited by The Bharat Express News staff and is posted Platforms.)