Briefing: Video platform iQiyi aims to raise $1.1 billion in convertible bond sale

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China video-streaming firm iQIYI targets raising $1.1 billion in convertible bonds – Reuters

What happened: Chinese video-streaming platform iQiyi plans to raise about $1.05 billion by offering convertible bonds in one of the largest-ever such sales by a US-listed Chinese company, as it seeks to fortify itself financially in the crowded online video market. According to a term sheet obtained by Reuters, the new six-year bond will pay a coupon between 2% and 2.5%. The total size of the deal could reach $1.2 billion, as it also has an over-allotment option for up to $150 million. This is iQiyi’s second convertible bond offering after raising $2.4 billion in its public offering on Nasdaq a year ago. It paid off its $750 million convertible bond obligation with a 3.75% coupon in December.

Why its important: The Baidu-backed video-streaming company faces pressure from rivals including Bytedance and Tencent, which have gained an advantage in China’s burgeoning short-video market. IQiyi recorded a net loss of RMB 3.5 billion (around $550 million) in the fourth quarter of 2018, ballooning 470% compared with RMB 612 million losses in the same period a year earlier. The company spent heavily to produce original premium content, further pressuring its margins, according to CFO Wang Xiaodong. Its stock price closed at $24.02 on Monday, nearly half of its record high of $46.23 in June.