Meituan plans to raise around $3 billion in what would be its largest regular bond issuance ever, as the company faces intensifying competition in China’s food delivery market.
Meituan, which operates online platforms for food delivery and other consumer products, is aiming to sell about $2 billion of dollar notes and the equivalent of $1 billion of offshore yuan notes in a deal that could come to the market as early as Tuesday, according to people familiar with the matter. Details could change based on investor feedback, the people added.
Meituan’s planned offering comes as China’s food delivery and retail sectors become more competitive. Rivals including Alibaba Group Holding Ltd., and JD.com Inc. have fueled a price war this year, rolling out steep discounts and incentives to bolster their position in the increasingly crowded market.
The proposed dollar bonds would include 5.5-year, 7-year and 10-year maturities, while its offshore yuan notes, which would be the first such bonds the company has issued, would have 5-year and 10-year tenors. The company plans to use the proceeds of the offering to partly refinance offshore debt and for general corporate purposes, according to an exchange filing.
The debts being refinanced include a $1.5 billion convertible bond, said the people, who asked not to be identified discussing private matters. The company may also use the funds for share buybacks in the long term, and it has no plan to issue convertible bonds after repaying the existing notes, the people added.
Meituan’s share price has dropped about 33% in Hong Kong so far this year, compared with a 110% gain of Alibaba’s, according to data compiled by Bloomberg.
Meituan declined to comment.
Rising competition dents Meituan’s margin
Competition from JD.com and Alibaba is expected to be extended into 2026, which will further pressure Meituan’s margin and cash flow generation, said Zerlina Zeng, head of Asian strategy at Creditsights Singapore.
“We expect Meituan’s credit profile to deteriorate over the next 12 months and see increased risk of negative rating actions. Given the tight spreads of Asia dollar credits, we prefer staying up in credit quality,” Zeng added.
Meituan fundraising details
Moody’s, meanwhile, assigned a Baa1 rating to the proposed offering, saying it would strengthen Metiuan’s liquidity and improve its maturity profile, while posing limited impact on its credit metrics.
Meituan first tapped the dollar bond market in 2020 with a $2 billion offering. It then issued $2.98 billion of convertible bonds in 2021, according to Bloomberg-compiled data. The company returned to the dollar bond market last year when it sold two notes, raising a total of $2.5 billion.
Meituan has a 2.125% $750 million bond maturing Tuesday, with its next major offshore regular bond due in 2028, according to Bloomberg-compiled data.
