Xiaomi to raise $1.2 billion in debt issuance, as China’s tech purge continues

Chinese budget smartphone maker Xiaomi is set to raise around $1.2 billion from debt issuance, with $800 million worth of bonds due for payment in 2031 with a coupon of 2.87 percent per year, a regulatory filing said.  

The move comes at a tricky time as other Chinese tech companies have seen themselves pitted in a government crack down led by the country’s internet watchdog that saw them lose a combined $823 billion in market share since their peak in February, according to a report by Bloomberg

According to the filing, the funds will be used for “general corporate purposes.” 

In parallel, the company will also issue a second batch of green bonds worth $400 million with a coupon of 4.1 percent per year.  

Green bonds are fixed-income financial instruments that have positive environmental and/or climate benefits. They follow the Green Bond Principles stated by the International Capital Market Association, and the proceeds from the issuance of which are to be used for the pre-specified types of projects. 

Xiaomi highlighted in the filing that the proceeds will be used to fund green projects within its environmental program called “Green Finance Framework.” 

The company currently sits as the third largest smartphone maker worldwide according to numerous reports, with the company looking to expand its market share into other technological fields such as electric vehicles (EVs).  

Earlier in April, Xiaomi announced that it will invest 10$ billion to develop EVs over the span of the decade, with a new subsidiary to handle the venture; many analysts and pundits have tapped the EV industry as a potential destination of the money garnered by the issuance.  

All this is happening for the budget smartphone maker, as its country of origin is currently waging a war against its own tech sector with legislation and regulations targeting some of China’s biggest tech companies with antitrust, data protection, security claims.  

Popular Chinese ride hailing mammoth Didi has been the recent focus of the government, who has opened a security inquisition within the company and ordered app to be removed from the country’s app stores.  

Xiaomi has been successful in dodging fire caused by a U.S.-China trade war, which saw the company being blacklisted in the United States, in which the company challenged the claims and won lawsuit, freeing itself from the clash.