Alibaba Planning to Sell Convertible Bonds Worth $4.5 Billion

Alibaba - Convertible Bonds

Hong Kong-listed shares of Alibaba fell over 5% Thursday following a report that the Chinese tech giant is considering selling convertible bonds to raise $5 billion.

Shares ended the trading day 5.24% lower, after falling more than 6% earlier. The company was the third worst performer of the Hang Seng index on the day, according to LSEG data.

It said that a bond offering could emerge as soon as this week. Alibaba later on Thursday confirmed it plans to sell $4.5 billion worth of convertible bonds. It plans to use the proceeds of the sale to buy back some of its American depositary shares.

The firm’s shares edged up 1.26% in early morning trading in New York, as of 10:10 a.m. ET.

Alibaba – Convertible Bonds

Earlier this week, Chinese e-commerce rival took a similar step with a $1.75 billion convertible senior note offering due in five years with a 0.25% coupon.

Alibaba has a ‘decent shot’ at turning its business around within a couple of years, UOB says. Alibaba has a ‘decent shot’ at turning business around in a couple of years: UOB Alibaba weathered a stormy 2023 that included an expansive corporate structure overhaul and culminated in an 86% tumble in fourth-quarter net profit.

In a bid to draw investors on the side, the company in February announced it was bolstering the size of its share buyback program by $25 billion. Earlier this year, Alibaba CEO Eddie Wu pledged to “reignite” growth in the company with further investments. Early signs point to this strategy taking hold in the March quarter.

Further capital could boost the company’s activities in its core e-commerce sector, where it has contended with a domestic slowdown driven by cautious spending among Chinese consumers.

Alibaba – Convertible Bonds

The broader Chinese economy embarked on a sluggish recovery from spartan Covid-19 restrictions, with the latest official figures pointing to an 11.5% year-on-year hike in Chinese online retail sales, according to Chinese state news agency Xinhua.

Alibaba also maintains ambitions of capturing further market share in the hotspot market of artificial intelligence and cloud services.

The company released the latest version of its Tongyi Qianwen large language model — a software that can power artificial intelligence applications — earlier this month, following the launch of the technology’s first iteration in April 2023.

It recently joined an escalating price war in China by slashing costs up to 97% on a range of its LLMs. Alibaba shares have trended higher in the year to date, adding 4.03% on the Hong Kong Stock Exchange and 6.67% on the New York bourse.

Ethan Johnson
Ethan's journey into journalism began with a deep curiosity about how businesses operate and evolve in today's dynamic markets. Armed with a degree in Journalism from a prestigious university, he embarked on his career, initially covering local business developments before expanding his scope to national and international commerce news.