Huawei has once again issued fresh debt, taking its total raisings to 21 billion yuan (US$3.1 billion) so far in 2022, close to three times more than the sum raised all of 2021.
Huawei Investment Holdings announced Monday that it would issue CNY4 billion ($591 million) in new notes over a term of three years, Shanghai Clearing House said.
It is the fifth time this year Huawei has gone to China's domestic debt market and the third time it has issued medium-term debt, Caixin reported. In its last issue in April it raised CNY3 billion ($443 million) in medium-term notes.
Huawei says it will use the funds for working capital and business development.
Last year it issued three tranches of debt, raising CNY8 billion ($1.81 billion).
The growing resort to debt is another sign the vendor is feeling the squeeze from the contraction in its business while also trying to grow new segments such as autos, cloud and various enterprise verticals.
There is no suggestion it is financially stressed, however. Total revenue dove 29% last year, but debt-to-equity remained stable following a capital restructure and it has a AAA long-term credit rating from Beijing-based Lianhe Credit Rating.
Boosted by the windfall from the sale of its Honor division, Huawei had CNY416 billion ($61.4 billion) in cash and short-term investments in December 2021, up 16% year-on-year, and working capital of CNY376.9 billion ($55.7 billion), 26% higher, according to its 2021 financial statement.
A borrowing binge
But the company has been on a borrowing binge that preceded its inclusion on US entity lists. Total debts ballooned to CNY175 billion ($25.9 billion) yuan by end-2021, up from CNY39.9 billion ($5.9 billion) in 2017.
The biggest reach seems to be its R&D spend. Huawei is determined to maintain its research commitments despite the plunge in revenue. In 2021 it maintained R&D spending at CNY142.6 billion ($21 billion), but that accounts for 22% of sales revenue, a sharp rise from the previous year when it took just 16%.
It's also been an active investor in startups through its venture arm Hubble Investment.
It has invested in dozens of firms, mostly chip companies, since it was founded in 2019. (See Huawei builds out chip portfolio with dozens of investments).