Tencent raised about $5.7 billion through dollar and offshore yuan bonds on 13 October, compared with about $4.66 billion in its June sale, Reuters reported. Tencent is directing more money towards AI infrastructure as it takes on this debt.
Key points
- Tencent placed 10-year offshore yuan bonds worth 20 billion yuan, yielding 2.40 per cent, and a 30-year tranche worth 6 billion yuan, yielding 3.00 per cent.
- Both yuan tranches priced 50 basis points below initial yield guidance. Combined orders exceeded $23 billion, more than four times the final sale.
- The term sheet assigns the proceeds to general corporate purposes. Tencent’s first-half capital expenditure rose to 96.3 billion yuan from 45.9 billion yuan a year earlier.
Tencent’s yuan notes price below guidance
Tencent sold 20 billion yuan of 10-year offshore yuan notes at a yield of 2.40 per cent, against initial guidance of around 2.90 per cent. Its 6 billion yuan of 30-year notes priced at 3.00 per cent, against around 3.50 per cent initially. Each tranche came in 50 basis points below its starting yield guidance, according to term sheets reported by Reuters.
The dollar portion comprised $1.3 billion of 10-year bonds and $500 million of 20-year bonds. The shorter notes priced at 90 basis points over comparable US Treasury notes, down from initial guidance of around 115 basis points. The 20-year notes priced at 115 basis points over Treasuries, against around 140 basis points initially.
Offshore yuan debt carried lower borrowing costs in a sale dominated by those notes, Bloomberg reported. It described the transaction as Tencent’s largest bond offering in more than six years. Tencent had raised about $4.66 billion through dollar and yuan notes in June.
The final amount also exceeded the roughly $5 billion sale Tencent had been considering before pricing. AI Affairs had reported its plan for a bond sale of about $5 billion to fund AI-related spending.
Orders top $23 billion across Tencent sale
Combined investor orders exceeded $23 billion, more than four times the final offering size. Orders for the two offshore yuan tranches exceeded 105 billion yuan, while demand for the dollar bonds exceeded $7.4 billion. The dollar total included $1.576 billion of interest from joint lead managers, according to an updated term sheet reported by Reuters.
Tencent had initially been expected to raise at least $4.5 billion, according to a person with direct knowledge of the deal who spoke to Reuters on 12 October. The company’s return to the bond market followed its June sale of about $4.66 billion in dollar- and yuan-denominated notes.
Allspring Global Investments portfolio manager Gary Tan said Tencent’s quick return suggested capital remained available for AI spending, particularly for companies with strong cash flows, balance sheets and credible plans to generate revenue. He said investors were increasingly treating financing availability and the cost of capital as possible constraints on faster AI investment.
Tencent’s first-half spending reaches 96.3 billion yuan
Reuters reported that the deal’s bond documentation sets out Tencent’s intention to spend the money raised on its ordinary business needs. Reuters reported that the bond offering documents put Tencent’s capital expenditure for the first half of 2026 at 96.3 billion yuan, more than double the 45.9 billion yuan recorded a year earlier. That expenditure included computing equipment, software and data centres.
Moody’s is expected to rate the bonds A1 and S&P is expected to rate them A+, Reuters reported. The term sheet lists Tencent’s existing ratings as A1 from Moody’s, A+ from S&P and A from Fitch.
JPMorgan, Goldman Sachs, HSBC and Morgan Stanley are joint global coordinators for the dollar offering. Reuters reported that HSBC, JPMorgan, CITIC Securities, China Construction Bank, Bank of Communications, Bank of China, Agricultural Bank of China and ICBC (Asia) are managing the offshore yuan transaction, as set out in the bond documentation.
