on July 31, hunting cloud network news, baidu announced that it will issue $1 billion five-year bond, store 91 wireless financing for the purchase application. This is also the largest Chinese companies in recent two months overseas corporate bond issuance.
on the 16th of this month, baidu and 91 wireless to enter into a memorandum of understanding will pay $1.9 billion to buy 1.9 billion wireless has issued equity, all this has become China’s biggest Internet merger.
baidu the bonds issued by the senior unsecured debt, coupon rate of 3.29%, 1.9% higher than that of a similar period of American Treasury rates.
in fact, baidu is not short of the acquisition of funds to pay. From the point of the second quarter of the latest release, as of June 30, 2013, baidu’s cash, cash equivalents and short-term total investment of RMB 34.069 billion ($5.551 billion). The net operating cash flow in the second quarter of 2013 was 3.205 billion yuan ($522.2 million). From this perspective, baidu’s cash flow is still very good, this issue is mainly because the cost is low.
it also belongs to the company since the establishment of the second issue. Last November, baidu released the total $1.5 billion in dollar-denominated bonds, and 10-year period for 5 years. At the time, with emerging market standards, baidu debt cost is very low. A $750 million bond interest rate is 2.25%, which expires in 2017, and another $750 million bond interest rate is 3.5%, which expires in 2022. In contrast, China’s five-year bonds yielding 3.14% at present. Therefore, in fact, baidu’s borrowing costs even lower than the Chinese government.