ByteDance secures $29.6 billion, marking Asia's second-largest loan of the year, while obtaining it at a lower cost.

      ByteDance has secured a loan of $29.6 billion, marking the second-largest loan in Asia this year, and nearly three times the amount it borrowed offshore in 2024. Banks submitted over $30 billion worth of orders for a facility that initially aimed for $20 billion.

      Bloomberg first reported the terms of the loan. Citigroup and JPMorgan are orchestrating the deal, which has a three-year duration with a possible extension to five years. The agreement has not been finalized as banks are still confirming allocations.

      The loan's pricing is a matter of contention among lenders. ByteDance is set to pay an initial margin of 68 basis points over SOFR, reduced from the 85 basis points paid for its previous offshore loan, signifying that it borrowed significantly more at a considerably lower price.

      This occurred during a year when the loan market in Asia has been relatively sluggish. However, demand for this specific borrower has increased contrary to the general market trends.

      The increase is notable. ByteDance secured $10.8 billion from approximately 20 lenders in 2024 and was in early discussions for a historic $20 billion facility as recently as June, a target that the final amount has surpassed by nearly half.

      At that time, the 2024 facility represented the largest dollar corporate loan in Asia outside of Japan. Two years later, the same borrower has obtained nearly three times that amount and still ranks second in the region, reflecting both the year’s circumstances and the position of ByteDance.

      The intended use of the funds is for general corporate purposes, which, for ByteDance, currently involves data centers. The company is contemplating capital expenditures of up to $70 billion annually on AI infrastructure, a sum that would place it alongside American hyperscalers.

      However, it is also spending within constraints. U.S. export controls limit its access to Nvidia's advanced chips, necessitating the construction of custom silicon using Arm and RISC-V architectures, Qualcomm inference components, and local Chinese suppliers, which results in higher costs to assemble the required compute capabilities.

      Part of this budget also supports a competitor. ByteDance has been paying over $1 billion annually to utilize OpenAI's models via Microsoft Azure while developing its domestic hardware to reduce that dependency.

      Only one Asian borrower has raised more this year. In March, SoftBank signed a $40 billion bridge facility to fund its OpenAI investment, and together, these two deals frame the region's AI borrowing landscape.

      However, the structures are not directly comparable. SoftBank's facility acts as a bridge against an equity stake and is repaid when long-term financing is secured, while ByteDance is a revenue-generating business borrowing against its own operations.

      This distinction accounts for the 68 basis points pricing. Lenders are viewing revenue from TikTok and Douyin as collateral, rather than relying on a valuation of a private company that could fluctuate.

      The broader trend is becoming well-defined, with Big Tech's AI-related debt surpassing $350 billion as companies finance data centers with borrowed funds instead of cash flow. ByteDance's significant involvement shifts a considerable portion of this borrowing away from the U.S.

      The funds are aimed at advancing their capabilities. ByteDance is working on a ten-trillion-parameter model and expanding its data center network in Inner Mongolia, both of which are not feasible solely through operational cash flow.

      There is an unclear figure mentioned in the reports. The $70 billion capital expenditure figure contrasts with the 160 billion yuan (approximately $22.7 billion) that ByteDance was reported to be planning for 2026 earlier this year, and sources differ on whether $70 billion represents a definitive decision or a scenario being considered.

      The company has not publicly commented on either figure. It remains privately held, does not publish financial statements, and only reveals capital expenditures through the financiers who arrange its loans.

      This highlights the discreet significance of such a large syndicated loan. About twenty banks now have insight into ByteDance's finances that is not accessible to its users, advertisers, or most regulators.