Huawei’s Second Dollar-Denominated Bond Offering
On April 21, The Wall Street Journal reported Huawei was preparing to issue a 10-year, $2 billion dollar-denominated bond offering. The bond is the second of its kind after the company issued a $1 billion bond almost exactly one year ago. Although the company is best known for telecommunications infrastructure, the offering is reportedly intended to finance research and development related to its mobile division, which has experienced explosive growth over the past few years. In the smartphone industry, Huawei holds 8% of the global smartphone market and, primarily on the back of those sales, increased net profit by 32% last year.
As evidenced by the first bond offering being oversubscribed, investors are unconcerned with the company‘s ties to China‘s security services and military. Nor have they shown much concern that, in 2013, U.S. companies were effectively banned from purchasing telecommunications equipment from Huawei due to clear-cut national security concerns. Past reports drawing have linked Ren Zhengfei, Huawei‘s founder and CEO, with both the People‘s Liberation Army and the National Congress of the Communist Party of China. In addition to Washington, India, South Korea, the United Kingdom and others have expressed concerns related to Huawei‘s involvement in espionage and have banned, or considered banning, government use of their products and services.
Likely managers of the bond offering include DBS Bank, Australia and New Zealand Banking Group, Standard Chartered Bank and Bank of China. The offering could be completed as early as this month.