By Kane Wu and Yantoultra Ngui
HONG KONG, Sept 4 (Reuters) - ByteDance has secured a $29.6 billion loan from nearly 30 banks, three people with direct knowledge of the matter said on Friday, with the Chinese social media giant's bet on AI development driving strong interest from lenders.
The loan is the second-largest made in Asia this year after SoftBank raised $40 billion in March to boost OpenAI investments, underscoring lenders' enthusiasm for the sector which demands ever-increasing capital.
Chinese,
U.S., European and Singaporean banks are participating in the financing, the people said, with the three-year loan co-ordinated by Citigroup and JPMorgan set to be signed by ByteDance shortly.
ByteDance and JPMorgan did not immediately respond to requests for comment. Citi declined to comment. Bloomberg News first reported on the loan on Thursday.
The owner of popular social media apps Douyin and TikTok increased the facility from an initial target of $20 billion after an overwhelming response from lenders, said the people, who declined to be named as the information was confidential.
Chinese banks have subscribed to more than 60% of the total amount, one of them added.
ByteDance told lenders the financing would be for general corporate purposes, but the people said that the funds will mainly support the company's AI-related plans.
The facility has an initial term of three years and options to extend for two more years, two of them said.
RARE UNSECURED MEGA LOAN
ByteDance has stepped up its AI spending. Reuters reported in June that the tech firm was in talks with Shanghai-based Iluvatar CoreX to purchase AI chips for inference work and is also considering a similar deal with Baidu.
The new dollar-denominated facility is unsecured, meaning ByteDance is not pledging any asset or shares as collateral, reflecting how confidently lenders view the company's creditworthiness.
"It is very rare to see such a mega loan unsecured," said one of the sources. "The banks practically are counting purely on ByteDance's name."
The loan will be used to fund projects outside China, the source said, adding ByteDance is the offtaker for many of the data centers being built in Southeast Asia. An offtaker signs a binding contract with a data center to purchase a certain amount of its capacity.
"ByteDance is competing with local hyperscalers on AI data centers and with global hyperscalers on multimodal AI model," said Lian Jye Su, chief analyst at research firm Omdia.
"Both require massive investment, especially if we look at the Capex poured into AI training by the likes of OpenAI and Google," he said.
ByteDance last tapped the global loan market in September 2024, raising $10.8 billion from roughly 20 international and Chinese lenders, according to a Bloomberg report at the time.
(Reporting by Kane Wu, Yantoultra Ngui and Selena Li in Hong Kong; and Eduardo Baptista in Beijing; Editing by Sumeet Chatterjee, Kirsten Donovan)
