Pinduoduo’s convertible bonds will yield zero interest, setting precedent

This means the company can borrow cash at zero cost and its shares are highly favored by investors.

Photo credit: KrAsia

Convertible bonds worth USD 875 million issued by Pinduoduo, China’s second largest e-commerce company by annual active users, will yield zero interest and zero return when they mature in 2024, 36Kr reported on Wednesday, citing sources close to investment banks in charge of the bond sale.

The sources said that this is because these bonds are over-subscribed many times, adding that Pinduoduo is the first US-listed Chinese company to do this in 15 years.

The bonds come with the option for initial buyers to acquire a further USD 125 million of the instrument, according to a company filing from Monday.

Pinduoduo has yet to disclose these bonds’ final pricing.

The company’s shares closed at USD 30.99 on Tuesday, down 8.37% from the day prior. For its initial public offering in July 2018, Pinduoduo priced its shares at USD 19 apiece.