Baidu (NASDAQ:BIDU) is making a bold financial move, tapping into the market's appetite for Chinese tech with a $2 billion zero-coupon exchangeable bond offering. The bonds, set to mature in 2032, are linked to shares of Trip.com Group and structured to attract institutional investors through offshore transactions. With proceeds earmarked for debt repayment, interest payments, and general corporate use, this marks Baidu's second major capital-raising effort in recent weeksfollowing a $1.4 billion bond sale outside mainland China. The bonds will be listed on the Frankfurt Stock Exchange's Open Market, and major players like JPMorgan, Morgan Stanley, Goldman Sachs, and Bank of America are handling the deal.
The timing is strategic. Chinese tech stocks have been riding a wave of optimism, buoyed by Beijing's pledge to support AI and advanced manufacturing. But Baidu's stock hasn't quite kept paceup just 12.5% this year, far behind the Hang Seng Tech Index's 35% surge. The company is also contending with challenges in its core business, reporting a third straight quarterly revenue drop as competition in search and AI intensifies. Meanwhile, other Chinese giants are seizing the momentBYD (BYDDF) just pulled off a massive $5.6 billion share sale, the biggest in Hong Kong in nearly four years.
For investors, the structure of Baidu's bonds adds another layer of intrigue. The exchangeable feature allows hedging strategies that could shake up Trip.com's stock in the short term. Baidu, still a major shareholder in Trip.com, appears to be unlocking liquidity while navigating shifting market dynamics. Whether this financial play strengthens Baidu's long-term position or simply buys it time in a fiercely competitive tech landscape remains an open question.
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