Flat-panel display makers were among the biggest borrowers in Asia last week as they sought a combined US$1.75 billion in loans to boost production amid growing demand for televisions and computers that use the screens.
Chunghwa Picture Tubes Ltd (中華映管), the country's No. 3 flat-panel display maker, wants to raise up to NT$33 billion (US$990 million) for a NT$90 billion project that is expected to bring in an additional US$10 billion in sales a year when completed in 2006.
InnoLux Display Corp (群創光電), a unit of Hon Hai Precision Industry Co (鴻海精密), last week signed a NT$20 billion loan to make more thin-film-transistor liquid-crystal display monitors.
TPV Technology Ltd, the world's No. 4 maker of flat-panel screens, increased a loan by 60 percent to US$160 million to step up production and refinance debt.
"We are raising funds now for the expansion because we want to secure at all cost the personal computer market, which forms the foundation of our TFT-LCD business," said James Wu (巫俊毅), chief financial officer of Chunghwa Picture Tubes.
"It is also getting us ready for the expected takeoff of demand from the TV market in the second half of 2005," he said.
Orders for Chunghwa Picture Tubes' TFT-LCD screens more than doubled so far this year compared with same period last year to 1.7 million units, he said.
The LCD-related transactions from Taiwan are more competitively priced compared with recent ones from South Korean producers, mainly because there is more money available for lending in Taiwan, bankers said.
"These transactions are very much driven by liquidity," said Kevin Tham, head of loan distribution and syndicate in Asia at ABN Amro Holding NV.
"The local liquidity among Tai-wanese banks is much stronger than in Korea, so Taiwan has been a relatively tighter market in terms of pricing," he said.
Chunghwa Picture may pay an interest margin of about 70 basis points more than Taiwan's 90-day primary commercial paper rate -- currently 1.14 percent -- for the new loan. It is paying 80 to 90 basis points more than that rate for a NT$19 billion seven-year credit set up in 2001, Wu said.
InnoLux is paying a margin of 86.5 basis points more than the 90-day commercial paper secondary market, or trading, rate, currently 1 percent. A basis point is 0.01 percentage point.
LG.Philips LCD Co, a venture between South Korea's LG Electronics and Royal Philips Electronics NV, pays 1.2 percentage points over Libor for a three-year US$400 million credit maturing in 2006. Three-month dollar Libor (London interbank offered rate) is 1.11 percent.
Hong Kong-based TPV received offers of more than US$200 million for its credit that yields 95 basis points over Libor (London interbank offered rate).
InnoLux's loan was increased from NT$18 billion due to strong demand from banks.
Flat screens will overtake cathode ray tubes in personal computer monitors for the first time in the second quarter this year, Texas-based researcher DisplaySearch said last month. The flat-panel industry will grow this year by a fifth to US$44.5 billion, the researcher said in a forecast last year.
Taiwan-based manufacturers will account for 49 percent of the US$9.4 billion in global spending on LCD-making equipment this year, compared with 27 percent by South Korean makers.
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