Apple Inc plans to issue bonds in Taiwan for the first time with the aim of raising US$1 billion, sources familiar with the matter said, joining a line of big global names that have sold billions of dollars on the nation’s busy debt market.
Liquidity in the Taiwanese bond market is flush, with long-term buyers of debt, primarily life insurance firms, seeking creditworthy names and chasing higher yields.
Blue-chip multinationals regularly issue US dollar bonds of such size in Taiwan, home to Apple’s supply chain.
In December last year, US chipmaker Intel Corp sold US$915 million of 30-year bonds with yields of 4.7 percent. A month later, global brewer Anheuser Busch InBev SA issued a US$1.47 billion bond of the same maturity at 4.915 percent, according to data from the Taipei Exchange.
“Taiwan insurance companies don’t have enough good [quality] fixed-income investment targets,” said an official at a local securities house, declining to be identified as he was not authorized to talk to the media. “But their funds continue to grow because in this low rate macro-environment. Consumers prefer to buy financial products offered by insurance companies rather than park money in a bank deposit.”
The planned offering is likely to help Apple secure solid partnership with its suppliers, analysts said.
Taiwan is home Apple supply chain firms, including iPhone manufacturer Hon Hai Precision Industry Co (鴻海精密), contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電) and lens producer Largan Precision Co (大立光).
The US dollar bonds will have a tenor of 30 years and be callable after the second year, the sources said yesterday, speaking on condition of anonymity.
Apple declined to comment when asked about the plan.
So far this year, upwards of US$16 billion in new US dollar bonds have been issued, already more than half of the US$29 billion in US dollar bonds sold for all of last year, Taipei Exchange data shows.
The over-the-counter exchange, where corporate bonds can trade in the secondary market, said it was not aware of any plan by Apple to issue bonds.
Bond issuers only need three days or less to notify the exchange before being listed.
Market participants have been looking at initial yields of around 4.2 percent to 4.3 percent on the planned Apple bonds, two of the sources said.
Taiwan’s 30-year government bond, which is less liquid in the secondary market, was last quoted about 1.6475 percent.
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