Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chip manufacturer, sold its first bonds in nine years, tapping into low interest rates as it plans record annual spending.
TSMC sold NT$18 billion (US$620.57 million) of debt in two parts, spokeswoman Elizabeth Sun (孫又文) said yesterday. The company sold NT$10.5 billion of five-year bonds to yield 1.4 percent and NT$7.5 billion of seven-year debt to yield 1.63 percent, according to Bloomberg data.
“The demand for our corporate bonds is very, very strong,” Sun said.
The last issue was in 2002, she said.
The company’s board on Aug. 9 approved plans to sell as much as NT$35 billion of bonds “to secure long-term, low fixed-cost funding.”
TSMC has no timeline for issuing the remaining amount, Sun said.
Rising sales of chips used in mobile devices such as Apple Inc’s iPhone spurred TSMC to forecast a record US$7.4 billion of spending on equipment this year. Taiwan’s largest listed company by market value is leveraging its top credit rating to tap into demand as investors look for stability amid global debt concerns.
“Pricing of the debt is very low, so it’s good timing for them to borrow, although they don’t have urgent cash needs,” said Raymond Hsu (許智清), a Taipei-based credit analyst at Taiwan Ratings Corp (中華信評). “In the past, they’ve had a high cash balance and are financially quite conservative, so this allows them to boost their leverage.”