China’s food delivery giant Meituan to raise $2 billion bond deal amidst market slump

China’s food delivery giant, Meituan, is reportedly looking to secure up to $2 billion through a dual-tranche dollar bond deal, according to Reuters, which cited two sources familiar with the details.

The sources, who spoke on condition of anonymity, said Meituan is aiming to raise $1 billion from each of the two tranches: a 3.5-year bond and a 5-year bond.

For the 3.5-year bond, initial pricing guidance has been set at around 145 basis points over 3-year U.S. Treasuries, while the 5-year bond comes in at about 160 basis points over 5-year Treasuries.

“The company is planning to raise $1 billion from each of the tranches, the sources said. Initial price guidance for the 3.5-year bond is 3-year Treasuries plus about 145 basis points. For the longer-dated bond, guidance is 5-year Treasuries plus about 160 basis points,” Reuters reported.

The company intends to use the raised funds to refinance some of its offshore debt, which includes a $1.48 billion convertible bond maturing in 2027. Some of the proceeds will go toward managing this debt, with the bond becoming callable next year, one source said.

Earlier in June, Meituan rolled out a new initiative aimed at lower-income customers by offering discounted meals for group orders from the same restaurant. This comes as the company looks to boost sales amid a challenging market.

We covered Meituan last year after the food delivery giant acquired AI startup Light Year from its co-founder Wang Huiwen, as part of its push into generative AI. The deal was valued at $233.7 million in cash, along with debt and a payment to HongShan, an investor-backed by Sequoia Capital China.

Founded in 2010 by Wang Xing, Meituan has grown into one of China’s most prominent internet startups, offering everything from food delivery to local service deals and entertainment vouchers.