Update - 4/4/2019: Chinese tech and entertainment giant Tencent has announced proceeds of $6bn from its bond sale.
As reported by Reuters, the company says this will be used for refinancing and general corporate purposes
The firm made $2bn in five-year bonds - both fixed and floating - $500m in seven-year bonds with a further $3bn in 10-year agreements. The final $500m came from 30-year notes.
Original story - 3/4/2019: Chinese corporate behemoth Tencent Holdings is trying to raise some serious capital through a US dollar bond sale.
Reuters reports that it has seen a term sheet from the tech and entertainment giant detailing a sale of five-, seven-, 10- and 30-year dollar bonds, but says it has no indication of how much Tencent is looking to raise. The media outlet still claims that the Chinese firm is looking to raise $5bn, likely based on the fact that it did so last time it did a bond sale, back in January 2018.
Those bonds come with indicative interest rates of 115, 140, 165 and 185 basis points respectively ahead of US Treasuries. In English, that's 1.15, 1.4, 1.65 and 1.85 per cent more than whatever interest rate the US Treasury has pegged at the time.
The aforementioned term sheet says that proceeds from the bond sale will be used for refinancing and general corporate purposes.
In practical terms, bonds are an IOU between a company and investors. Tencent will issue a bond, benefitting from money, but having to repay the amount plus interest at a set time.
This is likely Tencent trying to recoup some of the value it lost in 2018 thanks to the Chinese games approval freeze. The firm makes roughly half of its money in a given year from this business and with China being one of its biggest markets.
This isn't to say that Tencent is down and out following the Chinese approval freeze. The firm just released its new mobile MMO Perfect World which - as reported by PocketGamer.biz - made $100m in its first month in the wild, kicking the wildly successful, also Tencent-published, Honor of Kings from the top spot in China's App Store.
It's also very likely that this cash will be used to further fuel Tencent's acquisition and investment strategy. The firm has put its hat in the ring to snap up Korean games firm Nexon, which would involve a substantial financial outlay, even if the cost is shared across the many companies currently part of a coalition led by NetMarble.