Chinese e-commerce giants Alibaba and JD.com are considering convertible bond sales to raise funds for share repurchases and growth, following in the footsteps of Lenovo. Lenovo, the world's largest PC maker, is raising $2 billion by issuing zero-coupon convertible bonds to a unit of Saudi Arabia's sovereign wealth fund, Alat, a subsidiary of the Saudi Arabia's Public Investment Fund (PIF). The bonds will pay no interest but give Alat the option to convert its holdings into shares at an initial conversion price. The net proceeds will be used for repaying debt and funding general corporate and working capital purposes. Lenovo also plans to set up a regional headquarters and a new manufacturing facility in Saudi Arabia, aiming to enhance its presence and spur growth in the Middle East and Africa markets. The issuance of convertible bonds by Alibaba, JD.com, and Lenovo reflects a trend among overseas-listed Chinese companies to lower funding costs in a high-interest rate environment. The collaboration between Lenovo and Alat also highlights the deepening economic ties between China and Saudi Arabia, with PIF actively investing in Chinese tech companies.
Chinese companies are rushing to tap into the US convertible bond market as Chinese regulators tighten restrictions on domestic fundraising and increase scrutiny on overseas listings. The US convertible bond market offers an attractive financing option for Chinese companies due to its lower costs and flexibility. In recent months, several Chinese companies, including JD.com and Baidu, have successfully issued convertible bonds in the US. The trend is expected to continue as more Chinese companies seek alternative funding sources. [fc6654f9] [cdef69ab] [9c6c6d4e] [0b4f8688]