Is Tencent, a company with deep pockets, also starting to borrow money?

Four years later, Tencent issued bonds again, making its debut in the dim - sum bond market.

Tencent Holdings announced in the Hong Kong Stock Exchange that on September 16, 2025, the company entered into a subscription agreement with the lead managers for the issuance of notes with a total principal amount of RMB 9 billion under the program. After deducting underwriting fees, discounts, and commissions, the estimated net proceeds from the issuance of the notes will be approximately RMB 8.97 billion. The company intends to use the net proceeds for general corporate purposes.

This is Tencent's first bond issuance in any currency since April 2021. A cash - rich company usually does not issue bonds frequently. Breaking the "silence" that lasted for more than four years and suddenly planning to raise funds has sparked market speculation. Why is Tencent suddenly "short of money"?

Refinancing old debts? Borrowing for share buybacks?

One popular answer in the market is refinancing of maturing debts. From the perspective of Tencent's current debt management, the company has a $1 - billion bond maturing in January 2026 and another $500 - million note maturing in April. Therefore, some voices in the market believe that issuing new bonds to refinance maturing debts and optimize the debt structure is the main reason for Tencent to issue dim - sum bonds.

However, the possibility of refinancing old debts is relatively low. The reason is that in the first two quarters of this year, Tencent's free cash flows were RMB 47.1 billion and RMB 43 billion respectively, far exceeding the company's total debt of RMB 10.5 billion. Horizontally comparing with other domestic tech giants, Baidu's free cash flow in the second quarter of this year was - RMB 4.7 billion, while Alibaba's was - RMB 18.815 billion.

Therefore, with Tencent's current abundant cash flow, there is no pressure to redeem these debts upon maturity, and there is no need to issue bonds specifically for this purpose more than half a year in advance.

However, although there is no need to refinance maturing debts, considering the current situation where the financing cost of dim - sum bonds is significantly lower than that of US dollar bonds, Tencent may have the demand for financial optimization strategies, that is, to replace the high - cost US dollar bonds that are about to mature and enjoy the benefits of the low RMB interest rate.

But besides that, a more likely main purpose for Tencent's plan to issue dim - sum bonds this time is to support its large - scale share buyback program.

Tencent has been conducting frequent and large - scale share buybacks this year. Data shows that as of September 11, Tencent's cumulative buyback amount this year has reached HK$49.954 billion, accounting for approximately 1.02% of its total share capital. This scale is far ahead in the Hong Kong stock market. HSBC Holdings, which ranks second, has a cumulative buyback amount of HK$25.253 billion this year.

As is well - known, for a long time in the past, Tencent was the most proficient Internet company in investment. Before 2021, Tencent mainly used its surplus cash for external investments. In the third quarter of 2021, Tencent's net income from its investee companies reached its peak, recording RMB 26.5 billion in that period, accounting for as high as 67% of the profit attributable to equity holders in the same period.

But after 2022, in the face of the large - scale reduction of shares by its major shareholder, PROSUS, Tencent launched a buyback hedging model. Looking back at the buyback history, Tencent's intensive buyback behavior started in 2021. In 2021, Tencent's annual buyback amount was HK$2.599 billion. After that, it has maintained intensive buybacks every year, and the scale has been increasing year by year. Last year, the buyback scale reached HK$112 billion, and this year's buyback target is HK$80 billion.

Source: Company announcements, Everbright Securities

Although from the perspective of cash reserves and free cash flow, Tencent still has abundant cash, this does not conflict with bond issuance. From a financial perspective, as long as the interest rate is low enough, it is a common practice in the industry to optimize the financial structure through bond issuance.

The most well - known example is Apple, which issued bonds intensively during the low - interest - rate period of the Federal Reserve.

Tencent's cash and cash equivalents

Following in Apple's footsteps

By examining Apple's "borrowing for share buybacks" strategy, it can be found that its borrowing strategy starting in 2013, combined with share buybacks, contributed to the rise of its stock price.

In 2013, Apple issued a record - breaking $17 - billion bond for the first time and launched a large - scale capital return program. Subsequently, in 2017, Apple continued to take advantage of the low - cost financing in the bond market and issued a $5 - billion bond. At that time, Apple's cash reserves exceeded $200 billion.

An important background for Apple's bond issuance during this period was that the United States was in a low - interest - rate period, which is the same logic as Tencent's bond issuance during the low - RMB - interest - rate period.

After the US tax reform, although the market entered an interest - rate - hiking cycle, to support its share buyback program, Apple still continued this strategy of optimizing its capital structure. For example, in February 2021, Apple issued a $6.5 - billion bond, and then in late August, the company announced the launch of a $5 - billion share buyback program. In May 2023, Apple also issued bonds worth more than $5 billion.

The most recent borrowing occurred in May this year. After a two - year interval, Apple issued a $4.5 - billion bond again, which was warmly welcomed by the market. According to sources, the subscription orders for the new bonds far exceeded Apple's target amount, with the total order amount reaching $10 billion.

Charting: 36Kr, Data source: Wind

Supporting share buybacks and adjusting the capital structure are the company's financial requirements. In addition, for blue - chip stocks like Apple and Tencent, bond issuance is also a welcome thing in the secondary market, which can always boost the stock price in a short period.

The underlying reason for the stock price increase is that share buybacks can indirectly increase EPS (Earnings Per Share), which is the core of this capital operation of borrowing for share buybacks. From the financial logic and actual results, Apple's several major bond issuances in history have directly or indirectly promoted the growth of its EPS.

The logic behind this is that Apple raises funds at an extremely low debt cost and uses it for large - scale share buybacks and cancellations, thereby reducing the total number of outstanding shares. Since EPS is calculated as net profit divided by the total number of shares, even if the net profit remains unchanged, the reduction in the number of outstanding shares will directly lead to an increase in EPS.

If we look at Apple's past profit trends, since 2013, the year - on - year growth rate of Apple's net profit has started to slow down, dropping from more than 50 percentage points to around 20 percentage points, which coincides with the time when Apple started large - scale share buybacks.

That is to say, against the background of the fluctuating decline in net profit and revenue growth rates, borrowing for share buybacks is one of the important ways for Apple to stabilize its EPS. Data shows that in 2017, Apple's net profit increased by 5.8%, but share buybacks drove a 10.2% increase in EPS. In 2023, Apple's net profit decreased by 2.8%, but EPS remained flat. This clearly demonstrates the amplifying effect of share buybacks on EPS.

In addition, Apple also effectively increased its ROE by using debt. As of the end of June this year, Apple's long - term debt was nearly $90 billion, but its return on equity was still as high as 35%.

It can be seen that Apple's bond issuance is a strategic financial operation carefully designed to maximize shareholder value. By borrowing for share buybacks to increase EPS, Apple can continuously send positive signals to the market, further supporting the stock price and forming a positive cycle.

The difference between Tencent's EPS and net profit growth rate

Back to Tencent, its share buyback operations, which are similar to Apple's in logic, have also led to similar results. In the first and second quarters of 2025, Tencent's EPS increased by 17% year - on - year, exceeding the net profit growth rates of 14% and 16% in the same period.

Although Tencent mainly relied on its strong internal cash flow to support share buybacks in the past, rather than completely relying on bond issuance, its plan to issue dim - sum bonds this year indicates that the company is considering starting to use a similar capital strategy of "optimizing financing costs to support shareholder returns".

As a major player in share buybacks, Tencent, now combined with bond issuance, from maintaining cash reserves, to debt replacement, and then to shareholder returns, has gradually caught up with Apple in its capital maneuvering skills.