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Tencent Music Entertainment<\/a><\/strong> has priced a USD $1 billion<\/strong> bond offering.<\/p>\n TME<\/strong> says it intends to use the net proceeds for \u201cgeneral corporate purposes, including refinancing of offshore indebtedness and share repurchases.\u201d<\/p>\n The offering comprises $500 million<\/strong> of 5.050%<\/strong> senior unsecured notes due 2031<\/strong> and $500 million<\/strong> of 5.650%<\/strong> senior unsecured notes due 2036<\/strong>.<\/p>\n The notes were priced on September 3<\/strong>, according to a pricing term sheet filed with the SEC<\/strong>.<\/p>\n TME<\/strong> confirmed the terms in an announcement carried in filings with the SEC<\/strong> and the Hong Kong Stock Exchange<\/strong> on September 4<\/strong>.<\/p>\n The company expects net proceeds of approximately $991.9 million<\/strong>, after underwriting discounts, commissions, and estimated offering expenses.<\/p>\n The 2031<\/strong> notes were sold at 99.804%<\/strong> of face value, for a yield to maturity of 5.095%<\/strong> and a spread of 60<\/strong> basis points over the benchmark US Treasury.<\/p>\n The 2036<\/strong> notes were sold at 99.638%<\/strong> of face value, for a yield of 5.698%<\/strong> and a spread of 95<\/strong> basis points.<\/p>\n Both tranches settle on September 10, 2026<\/strong>, and mature on September 10<\/strong> of 2031<\/strong> and 2036<\/strong>, respectively.<\/p>\n J.P. Morgan Securities LLC<\/strong>, Goldman Sachs<\/a> (Asia) L.L.C.<\/strong>, and The Hongkong and Shanghai Banking Corporation Limited<\/strong> are joint bookrunners on the offering.<\/p>\n UBS AG Hong Kong Branch<\/strong>, Bank of China Limited<\/strong>, and MUFG Securities Asia Limited<\/strong> are joint lead managers.<\/p>\n The company reported zero<\/strong> bank borrowings at the end of 2025<\/strong>.<\/p>\n By June 30, 2026<\/strong>, it had RMB 13.14 billion<\/strong> ($1.94 billion) of bank debt.<\/p>\n Of that, RMB 7.14 billion<\/strong> was classified as non-current and RMB 6.00 billion<\/strong> as current.<\/p>\n TME<\/strong> drew RMB 12.77 billion<\/strong> of new short-term and long-term borrowings during the first half of the year, according to its cash flow statement.<\/p>\n The rest came onto the balance sheet with Ximalaya<\/strong>, whose bank borrowings were consolidated when TME<\/strong> closed its $2.4 billion acquisition<\/a> of the Chinese audio platform on May 18<\/strong>.<\/p>\n Total consideration recognized at completion came to approximately RMB 14.0 billion<\/strong> ($2.06 billion), below the value reported when the deal was announced in June 2025<\/strong>.<\/p>\n Around RMB 8.6 billion<\/strong> of that was cash, with the balance in TME<\/strong> shares.<\/p>\n The same cash flow statement shows RMB 7.42 billion<\/strong> of net cash paid for business combinations over the half, against the RMB 12.77 billion<\/strong> drawn.<\/p>\n TME<\/strong> does not link the two, saying only that the facility proceeds \u201cwill be used to support our business transactions or for general corporate purposes.\u201d<\/p>\n All of TME<\/strong>\u2019s borrowings are RMB<\/strong>-denominated, unsecured bank debt.<\/p>\n Most of the long-term loans are priced at the Loan Prime Rate<\/strong> minus 0.85%<\/strong> to plus 0.30%<\/strong>, with a further RMB 45 million<\/strong> at a fixed 3.10%<\/strong>.<\/p>\n The facilities TME<\/strong> drew down over the half run from 316<\/strong> days to 10<\/strong> years.<\/p>\n The short-term loans carry rates of 1.70%<\/strong> to 2.30%<\/strong>.<\/p>\n Of the long-term portion, RMB 5.28 billion<\/strong> does not fall due for more than five years.<\/p>\n On the notes side, TME<\/strong> has $500 million<\/strong> of 2.000%<\/strong> senior notes due 2030<\/strong> outstanding.<\/p>\n Those were issued in September 2020<\/strong> alongside $300 million<\/strong> of 1.375%<\/strong> notes due 2025<\/strong>, which the company says \u201chave been fully repaid.\u201d<\/p>\n The 2030<\/strong> notes had a fair value of $450 million<\/strong> at the end of June, against a principal amount of $500 million<\/strong>, and TME<\/strong> is \u201cnot subject to any financial covenants or other significant restrictions\u201d under them.<\/p>\n With every bank loan denominated in RMB<\/strong>, those 2030<\/strong> notes are the only offshore borrowing disclosed in either the prospectus supplement or the interim accounts.<\/p>\n Retiring them would mean replacing 2.000%<\/strong> money with the 5.050%<\/strong> and 5.650%<\/strong> money priced on September 3<\/strong>, against notes the market valued at around 90<\/strong> cents on the dollar at the end of June.<\/p>\n Total debt across borrowings and notes reached RMB 16.53 billion<\/strong> ($2.44 billion) at June 30<\/strong>.<\/p>\n TME<\/strong>\u2019s directors judged the risk attached to the group\u2019s capital structure to be \u201cremote as the Group has a net cash position,\u201d according to the interim accounts.<\/p>\n The company\u2019s combined balance of cash, cash equivalents, term deposits, and short-term investments was RMB 44.2 billion<\/strong> ($6.5 billion) at the end of June, up from RMB 38.0 billion<\/strong> at the end of 2025<\/strong>.<\/p>\n On the buyback side, TME<\/strong>\u2019s board authorized a $1 billion<\/strong> repurchase program on March 17, 2025<\/strong>, running for two years from March 21, 2025<\/strong>.<\/p>\n The company bought back 43.5 million<\/strong> ADSs for approximately $400 million<\/strong> during the second quarter, at an average price of $9.20<\/strong> per ADS.<\/p>\n That left $600 million<\/strong> of the authorization undrawn as of June 30<\/strong>, with the program due to expire in March 2027<\/strong>.<\/p>\n TME<\/strong> states in the prospectus supplement: \u201cWe may repurchase additional shares depending on market conditions.\u201d<\/p>\n In the second quarter, the company generated revenues of RMB 8.93 billion ($1.32 billion)<\/a>, up 5.8%<\/span> YoY<\/strong>, with music-related services revenue up 11.0%<\/strong><\/span> to RMB 7.61 billion<\/strong> ($1.12 billion).<\/p>\n Cussion Pang<\/strong>, Executive Chairman of TME<\/strong>, said of those numbers: \u201cOur second-quarter results reflect the continued strength of our content-and-platform strategy.\u201d<\/p>\n TME<\/strong> has been deploying capital elsewhere, too, buying HYBE\u2019s entire 9.38% stake in SM Entertainment<\/a> for around $177 million<\/strong> in 2025<\/strong>.<\/p>\n It also declared approximately $370 million<\/strong> in dividends for the 2025<\/strong> fiscal year, at $0.12<\/strong> per ordinary share, or $0.24<\/strong> per ADS.<\/p>\n The new notes are expected to be rated A2<\/strong> by Moody\u2019s<\/strong> and A<\/strong> by S&P<\/strong>, according to the term sheet.<\/p>\n