Bearing all this in mind, one Chinese non-SOE that should be successful in tapping bond markets is Tencent, which has recently announced the launch of a $US5 billion bond which would be the largest issuance this year in Asia, excluding Japan.
According to media reports, proceeds from the sale will be used for refinancing and general corporate purposes. Other sources suggest the Chinese social media and gaming behemoth is looking to diversify its business into areas such as cloud computing after reporting lacklustre results over the last 12 months.
Tencent is also taking advantage of an increasing demand in fixed income assets and the opportunity to lock in low-level interest rates over a longer term, considering global interest rates look set to head down sooner rather than later.
This is especially prevalent in Europe where the rather strange sounding negative-yielding corporate bond is making a resurgence. Put simply, it means investors get to pay companies for the privilege of lending to them.
It does not really make sense but there is now $US10 trillion worth of bonds showing negative yields globally, according to Bloomberg.
What it can be loosely attributed to is a decade of quantitative easing, which according to industry observers has changed the way capital and investments are judged.
Mark Eggleton, Contributing Editor, The Australian Financial Review
This article was first published on April 5 2019 in the Australian Financial Review’s Special Report on Rise of Asian Liquidity