Alibaba prints jumbo deal without China premium

Alibaba Group Holding sold the largest bond by an Asian company Thursday night (US time) via a $8 billion six-tranche offering. The tight pricing achieved on the deal led many to believe the US-listed Chinese ecommerce giant got away without paying a Chinese premium.

"The pricing on Alibaba's bonds did not reflect a China risk premium in our view, and was priced more like a US credit, given the solid demand from the US investor base and hype around the IPO," said Raymond Lee, Sydney-based portfolio manager at Kapstream Capital, one of Australia's largest fixed-income managers.

Over the course of the 24-hour three-timezone bookbuilding, orders topped at $57 billion before settling at close to $55 billion.

US investors anchored the trade by taking about three-quarters of the notes, two sources familiar with the transaction said.

"It is a defining trade not just for the sheer size, but the fact that it got priced against a peer group in a developed market," said a person familiar with the matter.

Alibaba bonds priced through some of the US blue chip tech giants such as Amazon and eBay.

"The company achieved the tight pricing as it was clear in positioning away from China," the person said.

In fact, Alibaba's three- and five-year tranches were priced tight to Chinese search engine giant Baidu Inc and inside the country's Web portal and social media leader Tencent Holdings.

Asian investors, whose orders exceeded $11 billion across the tranches, were allocated a mere 15-20 percent of the notes, the two sources said.