Investor demand for Alibaba's bonds reaches $55bn Alibaba attracted extraordinary demand as it tapped US debt markets for the first time on Thursday, lifting issuance by investment grade companies in the US to more than $600bn for the year. The order book for the Chinese ecommerce company's maiden $8bn debt sale was more than six times subscribed as demand reached $55bn, allowing Alibaba to tighten the pricing on the six-tranche sale, according to two people familiar with the offer. The dollar-denominated sale was made to qualified institutional investors in what is known as a 144A private placement. The offering, which was led by Morgan Stanley, Citigroup, Deutsche Bank and JPMorgan, comes as US borrowing costs remain low by historical standards, with the yield on the 10-year Treasury note at 2.34 per cent. Yield starved investors have ploughed into corporate debt, and there have only been a handful of offerings larger than Alibaba's this year, data from Dealogic shows. In 2014, high grade companies have sold $602.5bn worth of debt, including $75bn so far in November. Walgreens placed $8bn across seven tranches earlier this month to fund the cash consideration of its purchase of European pharmaceutical chain Alliance Boots. So-called 144A private placements have returned 6.1 per cent this year, marginally ahead of the 6 per cent total return for high-grade corporate issuance, data from Barclays Indices shows. While Alibaba toyed with increasing the size of the offering to as much as $10bn, it settled on the $8bn figure, the largest dollar-denominated offering by an Asian company. Alibaba, which collected a record $25bn in its initial public offering, had exhausted a credit facility, according to a filing with securities regulators in September. The Chinese company said it had entered into a new $3bn revolving credit facility at the time, although it had yet to tap the funding line. The company plans to use the proceeds from the listing to refinance those facilities. Alibaba floated on the New York Stock Exchange in September after the shares were priced at $68 apiece. The shares closed at $109.82 on Thursday, valuing the company at $266bn. The company priced the six-tranche issuance with yields at the low end of guidance at the start of the day as demand swelled past the $40bn mark. The order book eventually settled at more than $50bn. Roughly half of the offering's investors were from the US, with the remainder split equally between Europe and Asia. A person familiar with the matter added that investors who had no previous exposure to Alibaba had shown interest in the listing. The debt priced at a similar level to US groups such as Cisco and Oracle, as opposed to Chinese tech groups like Baidu and Tencent, as Alibaba shrugged off the difficulties some China-based companies have encountered when selling bonds. Differences in accounting standards have turned off some investors from Chinese based groups, forcing those issuers to lift the coupons on similarly rated debt. Alibaba's offering included three benchmark notes, led by a $2.25bn five-year and $2.25bn 10-year note, which priced at 2.5 and 3.6 per cent, respectively. A five-year floating rate note was dropped. The bonds are expected to carry an A+ investment grade credit rating by Standard & Poor's and Fitch, as well as an equivalent A1 rating from Moody's. "The rating reflects Alibaba's dominant market position in ecommerce in China and the company's minimal financial leverage," S&P said. Potential regulatory risk because of the company's variable-interest entity structure tempers these strengths.