Hong Kong regulators are now permitting companies to navigate previously strict rules on bond issuance and share repurchases, inspired by Alibaba’s successful $5 billion convertible bond deal in 2024. China’s tech giant leveraged near-zero interest debt to buy back New York-listed shares that had fallen roughly 75% from their peak in late 2020. The strategy helped the shares rebound by over 80%, fueled by a broader Chinese stock rally and the emergence of AI company DeepSeek.
The transaction has influenced Hong Kong’s financial authorities to allow local companies exemptions for similar trades, including concurrent share buybacks and derivatives structures for risk protection. Alibaba’s latest $3.2 billion convertible bond issuance, paired with capped call options, aims to expand cloud infrastructure and international e-commerce operations.
Other companies, including Bilibili and Chow Tai Fook Jewellery, have followed suit with convertible bond deals that include waivers for simultaneous share buybacks. Analysts note that Asia’s corporate appetite for convertible bonds is growing, driven by favorable interest rates and a desire to finance operations without immediate equity dilution. Alibaba’s innovative approach has highlighted the strategic use of capital markets to enhance shareholder value while maintaining market integrity.
