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Alibaba Is in Talks for Its Cheapest Ever Dollar Loan

Carol Zhong and Annie Lee
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Alibaba Is in Talks for Its Cheapest Ever Dollar Loan

(Bloomberg) -- Alibaba Group Holding Ltd. may get its cheapest dollar-denominated syndicated loan ever as it negotiates with banks to amend terms of its existing $4 billion borrowing.

The Chinese Internet giant wants to cut the interest margin of the facility that it signed in May 2016 by 25 basis points to 85 basis points over Libor, said people familiar with the matter. That would be the cheapest rate ever for Alibaba, Bloomberg-compiled data show. It’s also the lowest margin among outstanding loans of local peers Tencent Holdings Ltd. and Baidu Inc, according to the data. Alibaba declined to comment in an emailed statement.

China’s big technology groups have been using their stronger credit profiles to cut loan costs as lenders grow cautious on weaker companies in the wake of soaring defaults in China. Tencent also pushed down its syndicated loan margins by 25 basis points in the past. Other top firms including New World Development Co. and shoe retailer Belle International Holdings Ltd. trimmed interest rates and extended maturities on their existing syndicated facilities last year.

Alibaba is offering lenders an indicative one-off fee of 25 basis points, which will translate to an all-in pricing of 90 basis points, lower than the one it offered in the original deal, said the people, who aren’t authorized to speak publicly and asked not to be identified.

The company is also seeking to extend the loan tenor by five years from the amendment date among other changes to the facility, said the people. The final terms for the amendments and extension haven’t been finalized yet, they said.

The $4 billion syndicated loan was originally due to mature in 2021. Alibaba also has a $5.15 billion syndicated loan due in 2022 which has an interest margin of 95 basis points, according to data compiled by Bloomberg.

(Updates with Tencent’s reduction on margins in third paragraph.)

--With assistance from Lulu Yilun Chen.

To contact the reporters on this story: Carol Zhong in Hong Kong at yzhong71@bloomberg.net;Annie Lee in Hong Kong at olee42@bloomberg.net

To contact the editors responsible for this story: Neha D'silva at ndsilva1@bloomberg.net, Chan Tien Hin

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