Moody's rates Baidu notes A3

Moody's Investors Service said it assigned an A3 senior unsecured rating to the proposed dollar-denominated notes to be issued by Baidu Inc.

The outlook is positive.

The proceeds will be used to refinance existing borrowings and for general corporate purposes, the agency said.

Baidu's proposed senior unsecured notes will improve its debt maturity profile and add capacity to accommodate its funding needs over the next 12- to 18-months, Moody's explained.

The proposed notes will have no impact on Baidu's debt leverage because the proceeds will be mainly used for debt refinancing, the agency added.

Moody's said Baidu's adjusted debt-to-EBITDA ratio will likely fall to less than 1.5x at the end of 2019, compared with 1.6x at the end of 2018.

The ratings reflect the company's position as the leading Chinese language Internet search engine, Moody's said, and the largest provider of online advertising services in China.

The ratings are constrained by China's competitive Internet market and rising acquisition risks related to the company's efforts to build an AI-powered platform, the agency said.

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