Tencent Music Entertainment has priced a USD $1 billion bond offering.
TME says it intends to use the net proceeds for “general corporate purposes, including refinancing of offshore indebtedness and share repurchases.”
The offering comprises $500 million of 5.050% senior unsecured notes due 2031 and $500 million of 5.650% senior unsecured notes due 2036.
The notes were priced on September 3, according to a pricing term sheet filed with the SEC.
TME confirmed the terms in an announcement carried in filings with the SEC and the Hong Kong Stock Exchange on September 4.
The company expects net proceeds of approximately $991.9 million, after underwriting discounts, commissions, and estimated offering expenses.
The 2031 notes were sold at 99.804% of face value, for a yield to maturity of 5.095% and a spread of 60 basis points over the benchmark US Treasury.
The 2036 notes were sold at 99.638% of face value, for a yield of 5.698% and a spread of 95 basis points.
Both tranches settle on September 10, 2026, and mature on September 10 of 2031 and 2036, respectively.
J.P. Morgan Securities LLC, Goldman Sachs (Asia) L.L.C., and The Hongkong and Shanghai Banking Corporation Limited are joint bookrunners on the offering.
UBS AG Hong Kong Branch, Bank of China Limited, and MUFG Securities Asia Limited are joint lead managers.
The company reported zero bank borrowings at the end of 2025.
By June 30, 2026, it had RMB 13.14 billion ($1.94 billion) of bank debt.
Of that, RMB 7.14 billion was classified as non-current and RMB 6.00 billion as current.
TME drew RMB 12.77 billion of new short-term and long-term borrowings during the first half of the year, according to its cash flow statement.
The rest came onto the balance sheet with Ximalaya, whose bank borrowings were consolidated when TME closed its $2.4 billion acquisition of the Chinese audio platform on May 18.
Total consideration recognized at completion came to approximately RMB 14.0 billion ($2.06 billion), below the value reported when the deal was announced in June 2025.
Around RMB 8.6 billion of that was cash, with the balance in TME shares.
The same cash flow statement shows RMB 7.42 billion of net cash paid for business combinations over the half, against the RMB 12.77 billion drawn.
TME does not link the two, saying only that the facility proceeds “will be used to support our business transactions or for general corporate purposes.”
All of TME’s borrowings are RMB-denominated, unsecured bank debt.
Most of the long-term loans are priced at the Loan Prime Rate minus 0.85% to plus 0.30%, with a further RMB 45 million at a fixed 3.10%.
The facilities TME drew down over the half run from 316 days to 10 years.
The short-term loans carry rates of 1.70% to 2.30%.
Of the long-term portion, RMB 5.28 billion does not fall due for more than five years.
On the notes side, TME has $500 million of 2.000% senior notes due 2030 outstanding.
Those were issued in September 2020 alongside $300 million of 1.375% notes due 2025, which the company says “have been fully repaid.”
The 2030 notes had a fair value of $450 million at the end of June, against a principal amount of $500 million, and TME is “not subject to any financial covenants or other significant restrictions” under them.
With every bank loan denominated in RMB, those 2030 notes are the only offshore borrowing disclosed in either the prospectus supplement or the interim accounts.
Retiring them would mean replacing 2.000% money with the 5.050% and 5.650% money priced on September 3, against notes the market valued at around 90 cents on the dollar at the end of June.
Total debt across borrowings and notes reached RMB 16.53 billion ($2.44 billion) at June 30.
TME’s directors judged the risk attached to the group’s capital structure to be “remote as the Group has a net cash position,” according to the interim accounts.
The company’s combined balance of cash, cash equivalents, term deposits, and short-term investments was RMB 44.2 billion ($6.5 billion) at the end of June, up from RMB 38.0 billion at the end of 2025.
On the buyback side, TME’s board authorized a $1 billion repurchase program on March 17, 2025, running for two years from March 21, 2025.
The company bought back 43.5 million ADSs for approximately $400 million during the second quarter, at an average price of $9.20 per ADS.
That left $600 million of the authorization undrawn as of June 30, with the program due to expire in March 2027.
TME states in the prospectus supplement: “We may repurchase additional shares depending on market conditions.”
In the second quarter, the company generated revenues of RMB 8.93 billion ($1.32 billion), up 5.8% YoY, with music-related services revenue up 11.0% to RMB 7.61 billion ($1.12 billion).
Cussion Pang, Executive Chairman of TME, said of those numbers: “Our second-quarter results reflect the continued strength of our content-and-platform strategy.”
TME has been deploying capital elsewhere, too, buying HYBE’s entire 9.38% stake in SM Entertainment for around $177 million in 2025.
It also declared approximately $370 million in dividends for the 2025 fiscal year, at $0.12 per ordinary share, or $0.24 per ADS.
The new notes are expected to be rated A2 by Moody’s and A by S&P, according to the term sheet.
In the prospectus supplement, TME describes itself as “the largest online music entertainment platform in China in terms of MAU as of December 31, 2025.”Music Business Worldwide
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