Baidu raises $1 billion in ESG bonds

In a statement China’s Baidu Inc said, it has raised $1 billion in two tranches of U.S. dollar sustainability bond, marking its first environment, social and governance (ESG) transaction.

While the first tranche covers a 5.5-year bond for $300 million the second is a 10-year tenure secured bond for $700 million.

The first bond was priced at US Treasuries plus 83 basis points, while the second was at US Treasuries plus 113 basis points.

The final price was significantly lower than when Baidu first flagged to investors on Wednesday.

Baidu had initially given a price guidance of U.S. Treasuries plus 115 basis points for the 5.5 year bond, and U.S. Treasuries plus 150 basis points for the 10-year bond.

The Chinese company intends to use the proceeds to reduce its debt and fund ESG-related projects within the firm.

So far this year, Chinese companies have raised $121.2 billion in U.S. dollar debt funding, slightly lower than the $126.6 billion raised during the same period last year, according to data from Dealogic.

In its prospectus for the deal filed with the U.S. Securities and Exchange Commission (SEC), Baidu acknowledged that the impact of China’s regulatory crackdown on the tech sector is yet to be fully known.

Earlier in July, China’s regulators had said, companies which have more than 1 million customers will undergo mandatory review by the Cyberspace Administration of China (CAC) before they are allowed to carry out any listing overseas.

“The draft measures remain unclear on whether the relevant requirements will be applicable to companies that have been listed in the United States and intend to conduct further equity or debt offerings, such as us. We cannot predict the impact of the draft measures,” said Baidu in its prospectus. Earlier this week, Chinese regulators published new rules aimed at mitigating anti-competitive behavior and handling of consumer data.

Categories: Creativity, Economy & Finance, Entrepreneurship, HR & Organization, Regulations & Legal, Strategy

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