Saturday, September 18, 2021
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Amid uncertainty, Chinese internet giant Baidu launches the US dollar sustainability bond

Even as clouds of uncertainty loom large over the fate of Chinese technology giants in the aftermath of new regulatory guidelines put in place by the Chinese government, Chinese internet giant Baidu Inc has announced to launch the US dollar sustainability bond in a deal that could test global investor appetite for China assets.

The company on Wednesday launched a 5.5 year and 10-year US dollar fixed-rate senior unsecured sustainable notes transaction. It didn’t immediately say how much it aimed to raise via the issuance.

Baidu has indicated to investors the 5.5 year tranche will be priced around US Treasuries plus 115 basis points, while the 10-year bond will be around US Treasuries plus 150 basis points. It said it intended to use the proceeds of the bonds to pay down current debt and fund environmental, social and governance (ESG) related projects within the firm.

The firm mandated Bank of America, Goldman Sachs and JP Morgan to lead the transaction. Chinese companies have raised $121.2 billion in U.S dollar debt funding so far in 2021, according to Dealogic data, slightly below the $126.6 billion raised during the same period last year.

In its prospectus for the deal lodged with the US Securities and Exchange Commission (SEC), Baidu acknowledged the impact of China’s regulatory crackdown on the tech sector is not yet fully known.

In July, China said companies with over one million customers would have to be reviewed by the Cyberspace Administration of China (CAC) before carrying out listings overseas.

“The draft measures remain unclear on whether the relevant requirements will be applicable to companies that have been listed in the United States and intend to conduct further equity or debt offerings, such as us. We cannot predict the impact of the draft measures,” Baidu said in the prospectus.

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