TSMC to issue NT$14.4 billion in bonds

CNA file photo

TAIPEI (CNA) — Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contact chipmaker, said it will issue NT$14.4 billion (US$482 million) in unsecured straight bonds to meet fund demands for new factory construction and the installation of production equipment.

In a statement, TSMC said the NT$14.4 billion straight bonds will be comprised of three tranches: NT$4.5 billion with a maturity of five years, NT$7.5 billion at seven years and NT$2.4 billion at 10 years.

TSMC said the three tranches will carry a rate of 0.55 percent, 0.6 percent, and 0.64 percent, respectively, with Hua Nan Securities serving as the underwriter.

It will be the third bond issuance by TSMC this year after NT$24 billion and NT$21.6 billion in unsecured straight bonds were sold in May and April, respectively.

On May 12, a TSMC board meeting approved a proposal for the company to issue up to NT$60 billion more in unsecured straight bonds.

Meanwhile, Taipei Exchange (TPEx) said the business sector is keen to issue bonds to take advantage of low interest rates at a time when the central bank has loosened monetary policy to combat the economic impact of COVID-19.

TPEx, which operates the local bond market, said the total issuance for 2020 could hit a new high of NT$500 billion, compared with about NT$408.5 billion in 2019.

From Jan. 1 to May 19, a total of NT$216.8 billion in both straight and convertible bonds were sold in Taiwan, almost double the NT$128.9 billion over the same period of last year, data compiled by TPEx showed.

In March, the central bank cut its key interest rates by 0.25 percentage points to stimulate the local economy, pushing the discount rate down to a new low of 1.125 percent.

TPEx said many enterprises are also interested in securing long term funds through bond issuance to overcome the impact of COVID-19, citing the newly approved NT$60 billion bond sale at TSMC.