By P.R. Venkat
Meituan, China's leading shopping-and-delivery platform, plans to raise $2.5 billion by issuing bonds, proceeds of which will be used the refinance offshore debt.
The company plans to issue $1.2 billion in notes due April 2028 and another $1.3 billion maturing in October 2029.
The coupon on these bonds will be 4.500% and 4.625%, respectively, Meituan said Wednesday.
Although the new senior notes have a higher interest rate, the impact on Meituan is likely to be limited given the strength of its core local commerce operating profit, Jefferies equity analysts Thomas Chong and Zoey Zong said in a note.
Meituan said it could redeem the notes before their maturity dates and that issuance of the notes wouldn't restrict its ability to incur additional debt.
Part of the proceeds will also be used to meet general corporate needs, it said.
Fitch Ratings has assigned a BBB rating to the U.S. dollar notes and said that the Chinese e-commerce company's recent upgrade reflects improvement in profitability and strong free cash flow generation ability due to successful strategy execution.
"We expect Meituan to generate strong FCF (free cash flow) over the medium term. It is unlikely to make any significant asset-heavy investments in the near term," Fitch said.
Goldman Sachs, BofA Securities, and Morgan Stanley are among the banks advising Meituan on the debt sales.
Write to P.R. Venkat at venkat.pr@wsj.com
(END) Dow Jones Newswires
September 24, 2024 21:26 ET (01:26 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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