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No Immediate Impact Expected on Baidu's (BIDU) Ratings Amid $1B Syndicated Loan - Moody's

April 18, 2016 12:25 PM EDT

Moody's Investors Service says that Baidu Inc.'s (Nasdaq: BIDU) (A3 positive) plan to raise $1 billion through a five-year syndicated loan will not immediately affect its A3 issuer or senior unsecured ratings, or the positive outlook on the ratings.

"The five-year syndicated loan will enhance Baidu's already strong liquidity profile," says Lina Choi, a Moody's Vice President and Senior Credit Officer.

In April 2016, Baidu started the process of arranging a syndicated loan of $1 billion, with a five-year tenure. The proceeds will be used for refinancing and general corporate purposes.

Moody's expects that Baidu will generate RMB23-RMB25 billion in adjusted EBITDA for the year ending 31 December 2016. Moody's also expects that the full year deconsolidation of Qunar (unrated) will enhance Baidu's EBITDA margin by 4%-5%.

Moody's will continue to monitor the announced potential sale of Baidu's 80.5% stake in iQiyi (unrated), a loss making subsidiary offering online video services. If the sale is realized, Baidu's EBITDA margin will improve further.

The company's strong cash holdings — including short term investments — of RMB68 billion at 31 December 2015, as well as Moody's forecast of RMB25-RMB26 billion in operating cash flows for the 12 months to 31 December 2016 will be adequate to cover Baidu's investments and payment obligations over the same period.

The principal methodology used in these ratings was Business and Consumer Service Industry published in December 2014. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology.



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