State-run Taiwan Power Co (Taipower, 台電) yesterday said it had sold NT$17.7 billion (US$592 million) in unsecured corporate bonds in two tranches via an auction on Wednesday.
Taipower said it auctioned NT$5.7 billion in seven-year bonds and NT$12 billion in 10-year debts. Proceeds from the sale will be used to finance future power generation needs, it said in a statement.
The latest auction was the company’s third bond sale this year after it sold NT$17.25 billion in bonds on April 25 and NT$16 billion on March 14.
Taipower is the largest issuer of corporate bonds in the country and the yield on its bonds usually serves as a benchmark for the nation’s corporate bond market. It sold NT$91.7 billion in bonds last year and NT$89.2 billion in 2010, company data showed.
Taipower said yesterday the newly sold bonds would be issued in the middle of August, with Grand Cathay Securities Corp (大華證券) serving as the lead underwriter.
It will repay bondholders in a lump sum at maturity, the statement said.
As concerns about the European debt crisis remain and the nation’s central bank last week left policy interest rates unchanged amid the economic uncertainty, investors have recently sought shelter in bonds.
“Pessimism over economic prospects continues to loom over the market,” Eric Hsing, a fixed-income trader at First Securities Inc (第一金證券), told Bloomberg yesterday. “As borrowing costs remain unchanged, there won’t be much room for yields to go down further.”
On Tuesday, chipmaker Taiwan Semiconductor Manufacturing Co (台積電) sold NT$9.9 billion of five-year bonds at a coupon rate of 1.28 percent and NT$9 billion of seven-year bonds at a rate of 1.4 percent. Last week, refiner Formosa Petrochemical Corp (台塑石化) issued NT$5.5 billion in five-year bonds with a coupon rate of 1.3 percent and NT$2 billion in seven-year debts at 1.44 percent.
Based on the results of Wednesday’s auction, Taipower will pay a coupon rate of 1.39 percent on its seven-year bonds and 1.49 percent on its 10-year debts, which are lower than the yields of 1.43 percent and 1.52 percent it paid on previous sales of seven-year and 10-year bonds.
However, the rate of 1.49 percent on the company’s 10-year bonds was higher than the 1.229 percent yield yesterday on 10-year government bonds due in March 2022, GRETAI Securities Market data showed.
Taipower has a long-term “twAAA” rating and short-term rating of “twA-1” at Taiwan Ratings Corp (中華信評), with a stable outlook on its credit profile.