Tencent plans to raise 2 billion yuan through five-year notes, which offer a 2.1% coupon rate.
Chinese tech company Tencent Holdings is set to make a significant move in the financial market. It has announced that it will raise 9 billion yuan (approximately US$1.27 billion) by issuing a denominated dim sum bond. This is its first bond sale in four years and is seen as its broader push to make investments in artificial intelligence (AI).
The dim sum bond will be offered in three tranches, with maturities of 5,10, and 30 years. Dim sum bonds are bonds denominated in Chinese yuan but issued outside China, targeting international investors seeking exposure to the Chinese currency.
Tencent plans to raise 2 billion yuan through five-year notes, which offer a 2.1% coupon rate. The company wants another 6 billion yuan through ten-year notes at a 2.5% coupon, as well as an additional 1 billion yuan through thirty-year notes that pay a 3.1% coupon.
It is the world’s largest gaming company and operator of WeChat (China’s top social media app). It stated that it wants to raise funds for the company’s general needs, but did not provide specific details.
Market watchers predict that the move signals the company’s commitment to AI and digital innovation, especially as competition heats up among Chinese tech companies, including Alibaba Group Holding and JD.com. These Chinese companies are also looking aggressively to raise capital to fund their AI and cloud computing projects.
Last week, Alibaba raised $3.2 billion by selling zero-coupon convertible senior notes to fund its cloud and international e-commerce business. In July, the company raised HK$12 billion through exchangeable bonds to fund the expansion of similar businesses.
According to Kenny Ng Lai-yin, a strategist at Everbright Securities International, big tech companies such as Tencent and Alibaba, as well as others in China, are eager to capitalise on the recent market rally to raise funds.
The stock market mirrored this enthusiasm. The benchmark Hang Seng Index has increased by 33%, ranking as the world’s best-performing equity market as investors rush to invest in Chinese tech stocks.
Tencent’s own shares, listed in Hong Kong, climbed 2.6% to reach HK$661.50, the highest they’ve been since early 2021.
There is an upward trend as investors believe that there is long-term potential in AI, cloud computing, and robotics. Many are willing to invest in bonds and convertible notes issued by leading tech companies to help finance these next-generation growth engines.
Eugene Ng, Head of Debt Capital Markets for Greater China at HSBC (one of the lead coordinators for the offering), noted that Tencent’s decision to raise funds aligns perfectly with the opportunities in the yuan bond market, which is becoming an increasingly attractive fundraising platform for tech companies.
Other tech giants are following the trend. Baidu recently announced plans to issue 4.4 billion yuan in dim sum bonds, after announcing a sale of 10 billion yuan in March. Meituan is reportedly considering a similar move. According to Deutsche Bank, the annual issuance in the dim sum bond market tripled between 2022 and 2024, reaching 1.4 trillion yuan last year, and further records are expected in 2025.
Tencent’s notes will be sold privately to non-US investors and will be listed on the Hong Kong stock exchange. The offering was met with strong demand from top-tier investors, and experts say it highlights Hong Kong’s critical role as the world’s largest offshore yuan hub. Notably, Tencent’s successful issuance of a 30-year dim sum bond marks a milestone for the market’s maturity.
Following this issuance, Tencent will have a total of US$19.01 billion in outstanding notes under its global medium-term note programme.