Tencent Bond Raise

Tencent has just finished a raise of $6 billion through a bond sale, the business announced Wednesday evening.

Chinese social network and video gaming giant Tencent Holdings Ltd announced that it has raised $6 billion in a bond sale, with returns reserved for refinancing and corporate purposes.

The sale was Asia’s most significant this year, going beyond property designer China Evergrande Group’s $2.8 billion issuance in January, Refinitiv data showed

A business executive explained in an investor call on Tuesday that it intends to utilize approximately $3 billion of the raise’s proceeds to retire growing debt, including the $2 billion in bonds that are due next month.

Tencent tapped into the dollar bond market in January 2018 in a $5 billion four-part offering. The spread over treasuries on those bonds has risen considerably since its initial pricing, with a premium on its 10-year tranche up by about 35 basis points.

Tencent’s board explained in a statement that the bonds are expected to be released on April 11, and they will bring in net profits of approximately $6 billion

Deutsche Bank, HSBC, Goldman Sachs, and Morgan Stanley are joint international coordinators for the bond sale.

Regulatory troubles are a thing of the past for Tencent

Tencent had a difficult 2018, with trade war concerns weighing on Chinese stocks and the Chinese federal government stopping approvals of new computer game early in the year.

Games are required to be authorized by regulators in order to be monetized in China. Video gaming is a substantial part of Tencent’s profit generating business and the freeze in approvals triggered over $127 billion in lost market cap.

Net profit for the last quarter of 2018 fell by 32 percent, the most since the company went public in 2004.

Nevertheless, the company’s shares have been advancing at a significant rate, up more than 19 percent year-to-date.

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