Investors are beginning to question whether Alibaba Group Holding can pull off a jumbo dollar bond in coming weeks given the uncertainty around co-founder Jack Ma and the Trump administration’s crackdown on Chinese companies.
The potential sale of as much as $8 billion in offshore debt was planned for as early as this week; however, a marketing memorandum hasn’t yet been received by prospective investors, according to people familiar with the matter, who asked not to be identified as they’re not authorized to speak publicly. A spokesperson for Alibaba had no immediate comment on the progress of the sale.
That silence is leading investors to question whether the e-commerce giant will proceed with a sale at an increasingly challenging time. Reports of a potential U.S. investment ban this week also prompted spreads on some of Alibaba’s dollar notes to hit their widest in six months, Bloomberg-compiled prices show. And with the leadership of President Elect Joe Biden days away, there’s a good case to hold off until his China policy becomes clear.
“If I were the underwriter I would wait until the Biden Administration gets underway and perhaps take a more considered tone with China,” said Geof Marshall, who runs the fixed-income team at CI Global Asset Management’s Signature Global Asset Management, which has about C$30 billion ($24 billion) under management.
The Trump administration has taken several steps against Chinese companies, including banning apps from Alibaba affiliate Ant Group and Tencent Holdings. U.S. officials deliberated but ultimately decided against banning American investment in Alibaba and Tencent, removing a cloud of uncertainty over Asia’s two biggest corporations, Bloomberg reported earlier Thursday. Spreads on Alibaba’s dollar bonds tightened as much as 8 basis points Thursday morning, according to credit traders.