Xiaomi Corp. is returning to the loan market after a two-year absence with a $1 billion refinancing facility.
The Chinese smartphone maker is in early discussions with lenders for a five-year bullet club loan at an all-in rate of low to mid 100 basis points area over Libor, according to people familiar with the matter. That could mark Xiaomi’s cheapest loan in the market with its longest tenor, according to Bloomberg-compiled data. A Xiaomi representative declined to comment when contacted by Bloomberg.
Some of the bigger borrowers in the region are benefiting from lower costs thanks to ample liquidity in the loan market amid a 13% slump in volume so far this year. Last month, Chinese social media giant Tencent Holdings Ltd. clinched its biggest and cheapest ever dollar-based facility.
The refinancing facility comes as Xiaomi faces earnings headwinds amid a slowing Chinese economy worsened by the U.S.-China trade war. The company announced plans earlier this month to spend as much as HK$12 billion ($1.5 billion) buying back its own stock.
The latest loan is expected to be borrowed via Xiaomi Best Time International Ltd., and guaranteed by Xiaomi Corp., said the people, who aren’t authorized to speak publicly and asked not to be identified. It last came to the loan market in 2017 with a three-year facility of similar size.
The loan then was secured at an all-in pricing of 250 to 260 basis points via margin of 215 basis points over Libor. Xiaomi sought lenders’ consent in August last year to slash the margin of the loan by 60 basis points to 155 basis points over Libor.