Baidu Inc announced that they have sold US$1 billion of five-year bonds in China's largest corporate bond sale. The company said that the proceeds will help to fund the set takeover of 91 Wireless Websoft Ltd. The sale was tagged as China's second benchmark issue as investors determine the extent of the economic slowdown of the world's second largest economy.
Moody's Investors Service said that Baidu Inc had sufficient funding for the US$1.9 billion acquisition of 91 Wireless before the sale. Baidu opted to go offshore to get tax efficient financing. Baidu is set to gain a greater stake in China's mobile user market.
"The technology sector is considered more of a growth sector than a deep cyclical sector for China," Michael Roche, strategist for Seaport Group LLC, said. "It's still a growing field, compared to say metals or real estate, where a company would have had a more difficult time fulfilling their funding needs given the economic backdrop we have in China."
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