We talked about Alibaba earlier in the course when they made their IPO on the New York Stock Exchange. The Chinese e-commerce giant is making headlines and grabbing the attention of investors again as it sold eight billion dollars of bonds last Thursday. The bonds which consist of six tranches were issued to assist Alibaba in paying back a bank loan.
These bonds have received good ratings from agencies such as S&P and Moody’s. Alibaba received better ratings than some comparable companies like Amazon and Ebay. This could be a sign of the Alibaba’s growing strength, especially considering it turns a consistent profit unlike its largest competitor Amazon. Investors are very excited about Alibaba as is demonstrated by the 20% rise in stock price since the company’s IPO earlier this fall (which outpaces both the S&P and Dow Jones by about 17%). However not all investors are content with the company’s performance as it missed its second quarter earning estimates by 32.43% .
Alibaba is proving themselves as a strong global player with this debt offering. This is the largest dollar denominated bond offering by an Asian company yet. Investors are showing confidence and optimism as the bonds trade at levels comparable to well established companies like Cisco and Oracle. It looks like Alibaba will continue to grow. Its business model has been successful and investors continue to show enthusiasm in financing the Chinese eCommerce giant.