Tencent Kicks Off $5 Billion Bond Sale to Finance AI Spending

(Bloomberg) -- Tencent Holdings Ltd. began marketing dollar and offshore yuan bonds in an offering that could raise around $5 billion to support its escalating investments in artificial intelligence.

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The Chinese technology and gaming giant has set initial price guidance for its proposed 10-year and 20-year dollar bonds at around 115 and 140 basis points above comparable US Treasuries, respectively, according to a person familiar with the matter. The company is also marketing 10-year and 30-year offshore yuan-denominated notes, with guidance around 2.9% and 3.5%, the person said.

The securities could be priced as early as Tuesday, the person said.

The bond sale is part of a broader wave of fundraising by global technology companies seeking capital for AI-related projects. Just last month, SoftBank Group Corp. raised the equivalent of $11.1 billion in one of the largest corporate junk-bond offerings on record, in an effort to fund its massive AI ambitions.

But it also comes as investors grow increasingly concerned over whether spending on data centers, chips and model development will generate adequate returns.

Proceeds from Tencent's offering will be for general corporate purposes, such as AI-related capital expenditure, with the bulk of such spending directed toward chip purchases, other people familiar said on Monday.

The deal would mark Tencent's second offshore bond offering this year and its largest offshore note sale since 2020. In June, the company raised nearly $4.7 billion through a sale of long-dated dollar and offshore yuan bonds. Funds raised from the June bond sale were earmarked for debt refinancing and general corporate purposes, including the development of AI products and services.

Tencent has about $22 billion of offshore notes outstanding and no public bonds maturing this year, according to data compiled by Bloomberg. It has a $2.5 billion dollar bond due in 2028.

The company has been ramping up its AI-related spending as it tries to catch up to rivals such as ByteDance Ltd. and Alibaba Group Holding Ltd., raising capital expenditures by 176% on AI projects and computing to 52.8 billion yuan ($7.9 billion) in the June quarter.

Tencent aims to develop AI models akin to the best from DeepSeek or Moonshot AI, such as the Hy4 for later in 2026. It already operates one of China's largest AWS-like cloud services, offering computing to clients keen to develop their own AI platforms.