(Adds data on Chinese debt issuance, analyst comment) HONG KONG, Aug 18 (Reuters) - Chinese internet giant Baidu Inc is tapping debt markets with a two-tranche, U.S. dollar sustainability bond in a deal that could test global investor appetite for China tech assets as Beijing cranks up regulatory scrutiny. The search company on Wednesday launched a 5.5 year and 10-year U.S. dollar fixed rate senior unsecured sustainable notes transaction. It didn’t immediately say how much it aimed to raise via the issuance. Baidu has indicated to investors the 5.5 year tranche will be priced around U.S. Treasuries plus 115 basis points, while the 10-year bond will be around U.S. Treasuries plus 150 basis points, according to a term sheet reviewed by Reuters. It said it intended to use the proceeds of the bonds to pay down current debt and fund environmental, social and corporate governance (ESG) related projects within the firm. The firm mandated Bank of America, Goldman Sachs and JP Morgan to lead the transaction. Chinese companies have raised $121.2 billion in U.S dollar debt funding so far in 2021, according to Dealogic data, slightly below the $126.6 billion raised during the same period last year. “The current investor sentiment is not that great on Chinese tech sector due to the regulatory crackdown, but Baidu’s initiatives in the AI (artificial intelligence) space should drive its next phase of growth, and the market seems to have not paid adequate attention to that side of Baidu yet,” said LightStream Research analyst Shifara Samsudeen, who publishes on the Smartkarma platform. In its prospectus for the deal lodged with the U.S. Securities and Exchange Commission (SEC), Baidu acknowledged the impact of China’s regulatory crackdown on the tech sector is not yet fully known. In July, China said companies with over one million customers would have to be reviewed by the Cyberspace Administration of China (CAC) before carrying out listings overseas here. “The draft measures remain unclear on whether the relevant requirements will be applicable to companies that have been listed in the United States and intend to conduct further equity or debt offerings, such as us. We cannot predict the impact of the draft measures,” Baidu said in the prospectus. On Tuesday, Chinese regulators published new rules aimed at the China tech sector to tackle anti-competitive behaviour and companies" handling of data. here (Reporting by Scott Murdoch in Hong Kong; Editing by Kenneth Maxwell) Our Standards: The Thomson Reuters Trust Principles.