Chinese companies are increasingly unwelcome on US equity exchanges. US investor sentiment has soured after a string of accounting scandals. Washington may revoke Hong Kong’s special trading status as Beijing tightens its authoritarian grip on the territory.
Yet a $6bn dollar bond sale by Tencent has shown that peace, love and understanding still prevail in the corporate bond market. The computer games giant pulled off the largest Chinese corporate debt deal this year and issued its first 40-year bonds.
The window for such deals is now closing. Tencent was riding a wave of dollar bond issuance. US corporations have borrowed $1.2tn so far this year, reflecting coronavirus stresses. Strong demand for Tencent debt meant all tranches were priced more tightly than expected. The 10-year tranche bore a coupon of 2.39 per cent, about 1.7 percentage points above equivalent US Treasuries. The 40-year tranche priced at 3.29 per cent. Tencent was able to give away very little premium to investors on its debut 40-year paper.