Baidu Announces Pricing of CNY10 Billion CNY-denominated Senior Notes

Rhea-AI Summary

Baidu (NASDAQ: BIDU) has announced the pricing of CNY10 billion in CNY-denominated senior unsecured notes. The offering consists of CNY7.5 billion of 2.70% notes due 2030 and CNY2.5 billion of 3.00% notes due 2035.

The Notes Offering, expected to close around March 12, 2025, is being conducted in offshore transactions outside the United States to non-U.S. persons under Regulation S. The proceeds will be used for general corporate purposes, including repayment of existing debt and interest payments. The notes will be listed on the Hong Kong Stock Exchange.

Positive

• Successful CNY10 billion debt raising demonstrates strong market confidence
• Debt restructuring opportunity through repayment of existing indebtedness
• Long-term financing secured with 5-10 year maturities

Negative

• Increased debt burden with CNY10 billion new notes
• Additional interest payment obligations of 2.70-3.00% annually

Insights

Financial Analyst

Baidu's CNY10 billion (approximately $1.4 billion) senior notes offering represents a strategic debt financing move that warrants investor attention. The dual-tranche structure with 2.70% notes due 2030 and 3.00% notes due 2035 indicates a long-term financial planning approach with relatively favorable interest rates in the current environment.

The company's decision to denominate these notes in Chinese yuan rather than US dollars is particularly noteworthy, as it aligns with Baidu's primary operating currency and helps mitigate foreign exchange risks. This CNY-denominated issuance also provides natural hedging against currency fluctuations, given that Baidu generates substantial revenue in yuan.

The stated use of proceeds for "general corporate purposes, including repayment of certain existing indebtedness" suggests potential debt refinancing to optimize the company's capital structure. This could result in extended debt maturities and potentially lower overall interest expenses if replacing higher-interest debt.

For a company with Baidu's $30.6 billion market capitalization, this debt offering represents approximately 4.6% of its market value, a manageable proportion that shouldn't significantly alter its debt-to-equity profile. The offshore nature of the offering and listing on the Hong Kong Stock Exchange aligns with Baidu's dual-listing strategy and broadens its access to international capital markets.

Corporate Treasurer

From a treasury management perspective, Baidu's CNY10 billion note issuance demonstrates sophisticated liability management. The company has secured long-term financing at competitive rates—2.70% for 5-year notes and 3.00% for 10-year notes—which are particularly attractive in the context of the broader interest rate environment.

The yuan denomination is especially shrewd given potential currency volatility between USD and CNY. By matching debt currency with operational cash flow currency, Baidu creates a natural economic hedge that reduces translation risk on its balance sheet. This reduces the need for potentially expensive currency hedging instruments.

The intended use for repaying existing indebtedness suggests a liability management exercise aimed at term extension and possibly interest expense reduction. Without knowing the specific debt being retired, this likely represents a proactive refinancing ahead of nearer-term maturities.

Issuing these notes offshore but denominated in CNY (often called "dim sum bonds") gives Baidu access to a different investor base than purely domestic financing. The expected listing on the Hong Kong Stock Exchange will provide liquidity for the notes, potentially lowering yield demands from investors. This balanced approach to debt market access demonstrates financial flexibility that should be viewed positively from a treasury risk management standpoint.

BEIJING, March 5, 2025 /PRNewswire/ -- Baidu, Inc. (NASDAQ: BIDU and HKEX: 9888 (HKD Counter) and 89888 (RMB Counter)), ("Baidu" or the "Company"), a leading AI company with strong Internet foundation, today announced the pricing of its offering of CNY10 billion aggregate principal amount of CNY-denominated senior unsecured notes (the "Notes"). The Notes were offered in offshore transactions outside the United States to certain non-U.S. persons (the "Notes Offering") in reliance on Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act"). 

The Notes Offering consists of CNY7.5 billion of 2.70% notes due 2030 and CNY2.5 billion of 3.00% notes due 2035. The Company expects to close the Notes Offering on or about March 12, 2025, subject to the satisfaction of customary closing conditions.

The Company intends to use the net proceeds from the Notes Offering for general corporate purposes, including repayment of certain existing indebtedness, payment of interest and general corporate purposes.

The Notes have not been and will not be registered under the Securities Act or any state securities laws. They may not be offered or sold in the United States or to, or for the account or benefits of, U.S. persons (as defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

The Notes are expected to be listed on The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange").

This announcement shall not constitute an offer to sell or a solicitation of an offer to purchase any securities, in the United States or elsewhere, and shall not constitute an offer, solicitation or sale of the securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful. Any offering of securities will be made by means of one or more offering documents, which will contain detailed material information about the Company and its operational and financial performance.

This announcement contains information about the pending Notes Offering, and there can be no assurance that the Notes Offering will be completed.

About Baidu

Founded in 2000, Baidu's mission is to make the complicated world simpler through technology. Baidu is a leading AI company with strong Internet foundation, trading on Nasdaq under "BIDU" and HKEX under "9888". One Baidu ADS represents eight Class A ordinary shares.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Baidu may also make written or oral forward-looking statements in its periodic reports to the SEC, in announcements made on the website of the Hong Kong Stock Exchange, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Baidu's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Baidu's growth strategies; its future business development, including development of new products and services; its ability to attract and retain users and customers; competition in the Chinese Internet search and newsfeed market; competition for online marketing customers; changes in the Company's revenues and certain cost or expense items as a percentage of its revenues; the outcome of ongoing, or any future, litigation or arbitration, including those relating to intellectual property rights; the expected growth of the Chinese-language Internet search and newsfeed market and the number of Internet and broadband users in China; Chinese governmental policies relating to the Internet and Internet search providers, and general economic conditions in China and elsewhere. Further information regarding these and other risks is included in the Company's annual report on Form 20-F and other documents filed with the SEC, and announcements on the website of the Hong Kong Stock Exchange. Baidu does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this announcement is as of the date of the announcement, and Baidu undertakes no duty to update such information, except as required under applicable law.

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SOURCE Baidu, Inc.

FAQ

What is the total value and structure of Baidu's (BIDU) March 2025 notes offering?

Baidu's notes offering totals CNY10 billion, split between CNY7.5 billion of 2.70% notes due 2030 and CNY2.5 billion of 3.00% notes due 2035.

When will Baidu's (BIDU) CNY10 billion notes offering close?

The notes offering is expected to close on or about March 12, 2025, subject to customary closing conditions.

How will Baidu (BIDU) use the proceeds from its CNY-denominated notes?

Baidu will use the proceeds for general corporate purposes, including repayment of existing debt and interest payments.

Where will Baidu's (BIDU) new CNY-denominated notes be listed?

The notes are expected to be listed on The Stock Exchange of Hong Kong