On the evening of September 2, news broke that ByteDance, the company behind the short video sharing platform TikTok, 

is seeking a $9.5 billion loan from banks. This would be the largest U.S. dollar-denominated corporate loan in Asia (excluding Japan).

Citing sources, Bloomberg reported that ByteDance is in talks with banks for a $9.5 billion loan, which would be the largest

 dollar-denominated corporate loan in Asia (excluding Japan). Citigroup, Goldman Sachs, and JPMorgan Chase are said to be 

the coordinators for this financing, with a term of three years, extendable up to five years. Part of the proceeds will be used to refinance

 existing loans of $5 billion, and the rest will be used for operational funds.

Industry professionals believe that this massive influx of funds may be for ByteDance to consolidate its competitive advantage 

in the global market, especially in the in-depth development of emerging markets and product innovation.

Why does this prominent unicorn seek a huge loan refinancing?

-In May 2024, Fosun International (0656.HK) successfully completed the refinancing of its maturing $804 million loan, 

with $597 million raised through a new syndicated loan and the remainder repaid with its own funds.

-H&H International Holdings signed a commitment letter with several financial institutions for a total of $560 million in refinancing credit, 

including $540 million in senior secured term loan financing and $20 million in revolving credit financing.

-On July 9, 2024, Broadcom Inc. (AVGO.US) announced that it had successfully borrowed $5 billion in the U.S. investment-grade bond 

market to refinance part of the loans obtained for its $69 billion acquisition of VMware. Prior to this, Broadcom had obtained up 

to $28.4 billion in new debt commitments to fund this historic acquisition and replace a short-term loan obtained during the waiting period for regulatory approval.

Refinancing is likely based on the following two factors:

1. One of the core purposes of refinancing is to reduce borrowing costs.

Recently, the market widely expects the Federal Reserve to cut interest rates at some point in the future. Against the backdrop of 

changes in the global interest rate environment, seeking opportunities for lower interest rate loans can effectively reduce interest 

expenses and lower the cost of corporate funds. Through refinancing, ByteDance can optimize and adjust its existing debt structure,

 making the company's financial structure more robust and reasonable.

2. From the perspective of corporate development strategy, ByteDance is in a stage of continuous expansion and diversified development. 

Whether it is further expansion in overseas markets or substantial investment in emerging business areas such as artificial intelligence research 

and development (such as the additional investment of 1.5 billion ringgit in Malaysia in June for the expansion of data centers and the planned 

investment of 10 billion ringgit to build an artificial intelligence center), a large amount of funding and a more optimized capital structure are required. 

Refinancing can provide more flexible capital arrangements to meet the funding needs of different business segments.

Refinancing is also a strategy for companies to increase their cash reserves. In the face of increasing global economic uncertainty, sufficient 

cash flow is like the lifeline of a company, helping it better withstand external shocks.

Enhance the sense of crisis

At the 2024 annual meeting, ByteDance's CEO Leung Rubo emphasized the importance of continuous innovation and maintaining a sense of urgency, 

and his words still have a far-reaching impact today.

He advocates a consistent entrepreneurial spirit and an unremitting pursuit of mediocrity, which may be one of the key factors 

for ByteDance's success. In the process of pursuing cost-effectiveness and efficiency improvement, ByteDance strengthens its 

financial strength through loans and refinancing. Whether this can enhance the company's risk resistance is still to be observed. 

However, by increasing cash flow, ByteDance can take more initiative and thus have more room for maneuver.

There are different voices outside regarding ByteDance's strategy: some people think it is a manifestation of ambition, while others 

think it is taking risks. But no matter what view, we are sure that in the face of future challenges, ByteDance will not be unprepared.