Ant Financial in talks for a $3.5 billion loan at lower rate: report

Alibaba’s fintech affiliate Ant Financial is in talks with lenders for a syndicated loan of up to $3.5 billion, Bloomberg reported on Wednesday.

Why it matters: Ant Financial’s latest funding move follows a raft of Chinese tech firms seeking to lower debt costs. Some big borrowers in the region have been taking advantage of abundant liquidity in the loan market amid a slump in deal volume.

Details: Ant Financial is in discussions for $2.5 billion in financing that comes with a $1 billion greenshoe option, according to Bloomberg citing people familiar with the matter. An Ant Financial spokesperson told TechNode that the company does not comment on market rumors.

• The price for the three-year loan in question is less than 100 basis points over the London interbank offered rate known as Libor, or 1%, according to unnamed sources. When completed, the new loan will be used for general corporate purposes.

Alibaba gains 33% of Ant Financial in conclusion of spinoff deal

Context: Ant Financial last took out a syndicated loan in 2017, securing a $3.5 billion three-year loan and paying a margin of 1.35%.

• Last month, smartphone giant Xiaomi was in talks to re-finance a $1 billion loan. The deal followed Tencent’s largest dollar-based loan in August and Alibaba’s increase of an existing loan to $4 billion in May.
• In September, Alibaba took a 33% equity interest in Ant Financial’s newly issued shares. Many saw the move as clearing a path for Ant Financial’s future initial public offering (IPO) plans.