Xiaomi increased $1.2 billion in debt as Beijing targets the tech sector

July 9, 2021: -Chinese smartphone giant Xiaomi will raise around $1.2 billion via debt issuance when authorities are cracking down on technology giants of China.

Xiaomi issues $800 million worth of bonds due in 2031 with a coupon of 2.875% each year. The proceeds will be used for “general corporate purposes,” according to a regulatory filing.

The maker electronics will issue $400 million of green bonds with a 4.1% coupon per year. Green bonds are debt issued to increase money to support environmental projects. Xiaomi said the proceeds would go toward funding eligible projects under its “Green Finance Framework,” an ecological scheme.

The world’s third-largest smartphone maker, it has continued to expand and is looking at breaking into new areas such as electric vehicles globally. In March, Xiaomi said it would launch its electric car business and invest $10 billion of its own over the next ten years.

The money could go toward these initiatives.

Xiaomi’s debt issuance came as Beijing intensifies its scrutiny of the technology sector. In the previous years, the government has introduced a slew of legislation in areas from fintech to antitrust and data protection.

Beijing’s latest target is Didi. Post company went public in the U.S. last month, regulators opened a cybersecurity review into the ride-hailing giant and ordered its removal from China’s app stores.

Xiaomi has previously been caught in the geopolitical tensions between the U.S. and China.

In January, the Trump administration designated Xiaomi as one of several “Communist Chinese military companies” or CCMC. That meant Americans would eventually not be able to hold the company’s stock. Xiaomi challenged the order in court. And in March, a judge blocked the Trump-era order.