$3 Billion! Meituan's Largest Bond Issuance Ever to Reinforce the "Food Delivery War"

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Facing the increasingly fierce price war in China's food delivery and local retail market, Meituan is planning to launch the largest regular bond issuance in its history, seeking to raise about $3 billion to replenish its financial "ammunition" for the ongoing battle.

In an exchange announcement on Monday, Meituan disclosed plans to issue senior notes denominated in US dollars and Chinese yuan. According to media reports, Meituan aims to sell approximately $2 billion in US dollar notes, and an equivalent $1 billion in offshore yuan notes. The issuance could be launched as early as this Tuesday, but specific details may be adjusted based on investor feedback.

According to the announcement, the funds raised will mainly be used to refinance existing offshore debt and meet general corporate operational needs. Bloomberg compiled data showing that a $750 million principal bond of Meituan will mature this Tuesday, and the fundraising will provide critical support for its balance sheet management.

This year, industry giants including Alibaba Group and JD.com have rolled out substantial discounts and incentive measures, intensifying market competition and putting pressure on Meituan’s share performance.

The $3 billion fundraising will also become the largest regular bond issuance in Meituan’s history.

According to compiled media data, Meituan first entered the US dollar bond market in 2020 with a $2 billion bond issuance. In 2021, the company issued $2.98 billion in convertible bonds. Last year, Meituan returned to the US dollar bond market and raised a total of $2.5 billion through two note issuances. After repaying the $750 million bond maturing this week, Meituan’s next major offshore regular bond will mature in 2028.

Rating agency Fitch has given Meituan’s proposed US dollar bonds a "BBB+" rating, consistent with the rating of Meituan’s existing senior unsecured bonds.

However, Fitch has adjusted Meituan’s outlook from "positive" to "stable." Fitch noted that due to fierce market competition in the food delivery and quick commerce business segments, Meituan’s revenue growth is expected to slow in the short term, with profitability and free cash flow generation also set to weaken.

Despite short-term pressure, Fitch remains optimistic about Meituan’s long-term prospects. The agency expects the intensity of this round of price wars to ease in the next 6 to 12 months. Fitch believes that with its extensive merchant network, reliable delivery capabilities, deep local market experience, and ample net cash, Meituan can maintain its strong market leadership in core local commerce domains and expects the company to resume positive free cash flow by 2026.

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