Chinese delivery giant Meituan eyes US$3 billion from bond issue amid intense competition

Core Viewpoint - Meituan plans to raise US$3 billion through a dual-currency bond offering to strengthen its financial position amid intense competition from Alibaba and JD.com in the instant commerce sector [1][5]. Group 1: Bond Offering Details - Meituan will issue US$1.99 billion in US dollar-denominated bonds and 7.08 billion yuan (approximately US$1 billion) in yuan-denominated notes [1][2]. - The bonds will have maturity terms of six, seven, and ten years, with coupon rates ranging from 4.5% to 5.125% [4]. - The yuan-denominated notes will have tenors of five and ten years, with interest rates of 2.55% and 3.10%, respectively [4]. - The notes received ratings of A- from Standard & Poor's, BBB+ from Fitch Ratings, and Baa1 from Moody's [4]. Group 2: Competitive Landscape - The bond issuance reflects the fierce competition in the instant commerce sector, which combines online shopping with rapid delivery services [5]. - This competition has led to significant promotional subsidies and quick deliveries, impacting Meituan's market share and profit margins [5][7]. - Alibaba's instant commerce unit, Taobao Shangou, achieved a daily delivery volume of over 100 million in early August, closely trailing Meituan's volume [7]. Group 3: Market Dynamics - The instant commerce segment in China serves hundreds of millions of consumers accustomed to ordering a variety of products and services online with expedited delivery [6]. - Analysts indicate that the third quarter saw heightened competition in food deliveries, putting pressure on Meituan's revenue growth and profitability in the short term [8].