Mega Financial Holdings Co (
Fubon Financial Holding Co (富邦金控), the nation's second-biggest banking group, and China Development Financial Holding Corp (中華開發金控), which ranks fourth, plan similar sales, the bankers said, asking not to be identified.
Last month, a time when investors in Europe and the US typically take summer vacations, Taiwanese companies sold US$155 million of US dollar-denominated bonds convertible into shares, compared with US$1.6 billion in July and US$940 million in June.
"The market will reopen now the holiday period is over, with investors returning to their desks," said Michael Gibson, a fund manager at Long Investment Management in Hong Kong. "Taiwan issuance often picks up when the markets start to firm."
Fubon Financial might sell as much as US$260 million of the bonds, with Citigroup Inc and UBS AG managing the sale, the bankers said. Mega Financial may raise as much as US$900 million, with the help of Lehman Brothers Holdings Inc and Morgan Stanley, while China Development Financial is working with JP Morgan Chase & Co to raise as much as US$350 million, they said.
Companies from Taiwan sold US$4.7 billion of bonds convertible into shares this year, 18 percent more than during the same period of last year, as a 27 percent rise on the TAIEX fueled investor interest.
Mega Financial's sale, which could be the largest from the island, will help it pay interest and repay money borrowed to fund the takeover of International Commercial Bank of China (
Investors favor convertible bonds when stock prices are volatile because they combine the protection offered by a bond and the potential to profit from a share rally. Convertible bonds are cheaper for a company to sell than other debt because investors accept lower yields in return for the option to switch into stock.
Mega Financial's shares are up 5 percent this year, while Fubon Financial is up 10 percent. China Development Financial is down 1.5 percent.
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