Alibaba Seeks $6.5B Loan Refinancing As It Pours Cash Into Cloud, AI And Food Delivery Wars: Report

China's Alibaba Group is in talks with unnamed banks to refinance a $6.5 billion loan maturing next year, Bloomberg reported early Thursday, citing people familiar with the matter.

The tech giant is offering pricing of below 80 basis points over the Secured Overnight Financing Rate to existing lenders who agree to grant a five-year revolving credit facility, according to the report.

Alibaba’s shares were trading nearly 4% down in Hong Kong trading on Thursday.

It is common for large companies to refinance large loans before maturity, as this helps them avoid a significant cash outlay and maintain steady cash flow. It is also a means to lock in debt near the prevailing borrowing rates while preserving the company's cash reserves for growth or buybacks.

Alibaba is heavily investing in its cloud division and large language models, as the company seeks to diversify its revenue streams beyond its core e-commerce.

The company is also locked up in an expensive food delivery war in China, where players including Alibaba's Ele.me, Meituan, and the newest entrant, JD Daojia, are spending extensively on discounts and promotions to unseat one another.

Alibaba's U.S. shares gained at a rapid clip at the start of the year, but then crashed in March when the U.S. tariffs policy was announced. They have since traded within a narrow range, gaining 45.3% year-to-date.

In May, the company posted an underwhelming 7% revenue growth for the March quarter.

On Stocktwits, the retail sentiment for BABA shares was 'bullish.' Alibaba will report earnings on Friday.

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