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Meituan expects to raise US$3 billion from a dual-currency bond offering, as the Chinese on-demand delivery giant looks to bolster its war chest to stave off the challenge from rivals led by Alibaba Group Holding and JD.com. The Beijing-based company will offer US$1.99 billion in greenback-denominated bonds and 7.08 billion yuan (US$1 billion) of notes in the local currency, according to its statement to the Hong Kong stock exchange on Wednesday. Meituan said it had signed an agreement with initial buyers and applied to the city’s bourse for the listing and trading of those securities, which are targeted at professional investors. The proceeds from the bond offering would be used to refinance existing offshore debts and for other general corporate purposes, according to the statement. The US dollar bonds carry maturity terms of six, seven and 10 years, with the coupon rates ranging from 4.5 per cent to 5.125 per cent. The yuan-denominated notes have tenors of five and 10 years, with interest rates of 2.55 per cent and 3.10 per cent, respectively, according to the exchange filing. The notes were rated A- by Standard & Poor’s and BBB+ by Fitch Ratings, while Moody’s rated them Baa1, according to the filing. Meituan’s latest debt flotation reflects its intense competition against Alibaba and JD.com in instant commerce – a turbocharged combination of online shopping and swift dispatch – which has brought hefty promotional subsidies and speedy deliveries right to mainland consumers’ doorsteps. Alibaba owns the Post. The size and scope of instant commerce appear unparalleled in China’s retailing landscape, as the segment covers hundreds of millions of consumers who have grown accustomed to ordering a wide range of products and services online, with expedited on-demand deliveries. The competition led to a price war that has crimped Meituan’s margins and market share. Alibaba, for example, saw its daily delivery volume via instant commerce unit Taobao Shangou top 100 million in early August, only 20 million fewer than Meituan in the same period. “Sparked by subsidies, the third quarter marked the most intense competition for food deliveries,” said Xia Lulu, an analyst at Huatai Securities in Hong Kong. “Meituan’s revenue growth and profit would be under pressure in the short term.” Meituan’s Hong Kong-listed stock has dropped more than 30 per cent so far this year. While debt financing may offer some relief to Meituan’s business amid the heated competition, Huatai expected the company to report a third-quarter net loss of 15.9 billion yuan and a full-year loss of 7.9 billion yuan. The company’s revenue growth slowed to 4.5 per cent in the quarter to September, from 12 per cent the preceding quarter, according to Huatai. Meituan is expected to report its latest quarterly financial results on November 14. Meituan first tapped into the US dollar bond market in 2020, with a US$2 billion flotation, and issued US$2.98 billion of convertible bonds the following year. It sold two notes last year, raking in a total of US$2.5 billion.
