NEW YORK (Nov 21): Alibaba Group Holding sold US$8 billion of bonds in its debut sale at yields that were lower than originally offered after the Chinese e-commerce company got at least US$57 billion of orders from investors.

“The premium we see associated with Chinese companies is absent in this case,” Dorian Garay, a New York-based money manager for the global investment-grade debt fund at ING Investment Management, said in a telephone interview.

“It feels like new-issue concession is non-existent.”

Alibaba’s debt offering adds to a banner year for corporate bonds with worldwide issuance of US$3.8 trillion on pace to exceed US$4 trillion for the first time.

The Hangzhou, China-based company, which raised a record US$25 billion in an initial public offering in September, will use proceeds to refinance some credit agreements, according to a Nov 13 statement.

The banks underwriting the biggest dollar-denominated notes by an Asian company lowered the premium by as much as 0.27 percentage point on its longest-dated bond, according to a person with knowledge of the offering, who asked not to be identified because the details are private.

Alibaba sold the largest portions in equal US$2.25 billion offers of five- and 10-year notes, according to data compiled by Bloomberg.

The 2.5 percent, five-year notes sold at a yield of 95 basis points above similar-maturity Treasuries and the 3.6 percent, 10-year securities sold at a relative yield of 128 basis points, the data show.

Not buying
The pricing doesn’t seem to reflect the risks associated with the name, according to Garay, who said he’s not purchasing the bonds.

Debt of Chinese companies typically yield about 20 basis points to 50 basis points more than that of their US peers, Anthony Leung, a Nomura Holdings credit research analyst in Hong Kong, said in a report this week. A basis point is 0.01 percent.

Alibaba also sold US$1.5 billion of 3.125 percent, seven-year notes, US$1 billion of 1.625 percent, three-year securities, US$700 million of 4.5 percent, 20-year bonds, and US$300 million of three-year floaters, Bloomberg data show.

The company initially offered the 20-year bonds at a premium of 175 basis points above similar-maturity Treasuries, according to a person with knowledge with the offering.

Alibaba abandoned plans to include five-year floaters, according to a person familiar with the offering who asked not to be identified, citing lack of authorization to speak publicly.

Biggest deal
The US$8 billion sale eclipsed a US$6.5 billion issue last month by Bank of China to become the biggest dollar-denominated offering by an Asian company.

The company is led by billionaire Chairman Jack Ma, who founded it from his apartment in 1999 with US$60,000.

Its main marketplaces include Taobao, which links individual buyers and sellers, and Tmall.com, which connects retailers and consumers.

While bond investors have been known to pad orders to ensure they get a bigger piece of securities in high demand, the size of Alibaba’s book is rivalling those for other large offerings during the past two years, including sales by Apple and Verizon Communications.

For Apple’s US$17 billion offering in April 2013, the largest corporate-bond sale ever at the time, investors put in orders for US$50 billion, people with knowledge of the transaction said.

Verizon attracted buyers for as much as US$100 billion before its record US$49 billion offering in September 2013, people with knowledge of the deal said.

Alibaba’s notes are rated A+, or the fifth-highest investment-grade ranking, by Standard & Poor's and an equivalent A1 by Moody’s Investors Service.