Tencent Holdings, a leading Chinese gaming and social media company, is looking to raise the equivalent of $1 billion through a three-tranche offshore yuan bond deal, according to two sources with direct knowledge of the matter. The information has not yet been made public, and Tencent has declined to comment on the transaction.
A term sheet seen by Reuters on Tuesday reveals that Tencent plans to issue five-, 10-, and 30-year offshore yuan bonds. The “dim sum bonds” have an initial price guidance of approximately 2.6% for the five-year tranche, 3% for the 10-year, and 3.6% for the 30-year. The bond sale is intended for investors located outside of the U.S.
Like its competitors, Tencent has been heavily investing in artificial intelligence (AI), although its capital expenditure has recently moderated. After spending 36.6 billion yuan ($5.14 billion) in the fourth quarter and 27.5 billion yuan in the first quarter, its capital expenditures dropped to 19.1 billion yuan in the second quarter. In August, the company informed analysts that it plans to take a more measured approach to its AI initiatives, focusing on sustainable monetization and “spending smartly.”
