Tencent Holdings told bond investors Monday that its planned offering of about $5 billion will mainly fund AI-related capital spending, with most of that going to chip purchases, Bloomberg News reported, citing people familiar with the matter.

The Shenzhen-based company filed a notice with the Hong Kong stock exchange the same day saying it plans an international offering of notes to professional investors under its global medium-term note program. The filing does not give a size or say how the money will be used, and it cautions that the sale "may or may not materialise" because no binding agreement has been signed.

According to Bloomberg, the deal includes $1.5 billion to $2 billion of dollar bonds and 20 billion to 25 billion yuan, or $3 billion to $3.7 billion, of offshore yuan notes, and could price as soon as Tuesday. A term sheet seen by Reuters showed 10- and 20-year dollar bonds and 10- and 30-year offshore yuan bonds, with no size set. Ten banks, including J.P. Morgan, Goldman Sachs, HSBC and Morgan Stanley, are coordinating, according to the filing.

The people told Bloomberg the proceeds are primarily for general corporate purposes, "such as AI-related capital expenditure, with the bulk of such spending directed toward chip purchases," citing Tencent management. Tencent also said it has no current plans to issue shares or convertible bonds, the people said. Tencent did not respond to Bloomberg's request for comment.

The borrowing follows a sharp jump in spending. Tencent reported second-quarter capital expenditure of 52.8 billion yuan, up 176% from a year earlier, and negative free cash flow of 13.8 billion yuan. The company said its operating cash flow included large AI-related prepayments for computing infrastructure, and that excluding prepayments for compute procurement, free cash flow would have been 37.6 billion yuan.

Bloomberg reported that Tencent's capital spending is likely to stay elevated through the rest of 2026 and into 2027, pointing to slightly more than 200 billion yuan a year at second-quarter levels. Tencent last tapped the bond market in June, raising $4.66 billion in a four-part dollar and offshore yuan sale, Reuters reported.

*Sources: Tencent HKEX announcement (Oct. 12, 2026); Tencent second-quarter 2026 results; Bloomberg News; Reuters via The Standard.*