Tencent to Launch Asia’s Biggest Bond Sale This Year

Tencent gaming (Photo: Reuters)

Tencent Holdings Ltd, the world's largest gaming company and one of the world's most valuable technology conglomerates, plans to raise some $5 billion in U.S. dollar-denominated bonds as early as Wednesday.

The deal will be Asia's largest thus far into the year and will be the second bond sale for the Shenzhen-based firm. Tencent has hired Deutsche Bank, HSBC, Goldman Sachs, and Morgan Stanley as joint global coordinators for the bond issue, according to sources cited by Reuters.

Tencent last tapped the bond market in January 2018 when it raised $5 billion. It currently has a $6 billion offshore issuance quota from the National Development and Reform Commission (NDRC), which is the state agency with broad administrative and planning control over the Chinese economy.

On Monday, Tencent said in an exchange filing it had increased its Global Medium Term Note Programme limit to $20 billion from $10 billion.

Founded in 1998, Tencent and its popular applications such as WeChat and QQ have are ubiquitous elements in China's communications, financial and social fabric. Its social media reach is immense.

In January, Tencent revealed that WeChat alone had a billion active daily users. WeChat also gives Tencent a massive overseas presence.

An estimated 100 to 200 million people outside China use WeChat. Among them are millions of Chinese around the world. Malaysia has more than 20 million WeChat users, out of a population of 31 million.

In Thailand, about 17 percent of the population has a WeChat account. In Mongolia, WeChat was the second most downloaded application in 2017.

Tencent recently acquired a $150 million stake in the news aggregator Reddit and is eyeing an entrance into the online video market in Taiwan. All these need money and a bond sale is one way to generate quick cash.

On the upside for Tencent is it's recovery from China's online games suspension last year that crippled its core business. But Tencent has a lot of ground to make up.

Tencent has managed to get eight games approved since January has to contend with far stricter government rules on undesirable content, As a result, Tencent is pivoting to business-oriented services for faster growth. Among its newer ventures are cloud computing and online payments.

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