Mobile carriers planning 5G networks and the return of Taiwan’s biggest company to the local corporate bond market are poised to make this year a record for new issuance.
This year’s total could top the NT$624.6 billion (US$20.54 billion) of new corporate bonds sold in 2012, according to Masterlink Securities Corp (元富證券), which was the nation’s second-largest underwriter of such debt offered last year in New Taiwan dollars.
Overall issuance last year climbed 17 percent to NT$526.5 billion, according to data compiled by Bloomberg.
Leading this year’s selling brigade is Taiwan’s wireless firms. Last month, they made NT$138 billion of bids for 5G spectrum licenses.
Taiwan Mobile Co (台灣大哥大) has priced a NT$20 billion offering, people familiar with the deal have said.
The 10-year portion is to yield 0.72 percent, not much above the record-low 0.5374 percent such-tenored Taiwan sovereign debt finished on Thursday.
“The Taiwan Mobile deal is telling markets that demand is strong and it’s hard for yields to move higher,” Capital Securities Corp (群益金鼎證券) vice president Frank Lin (林彥棻) said.
Increased corporate-debt issuance in Taiwan this year is “not a problem as buyers, such as banks, have lots of cash,” he said.
So do life insurers. They have billions of dollars looking for a new home, which has helped fuel the heaviest insurer buying during recent government debt auctions in years, despite record-low yields.
The insurers’ foreign holdings are near statutory maximums intended to limit foreign-currency risks, capping the firms’ ability to chase returns overseas.
Their buying of Taiwanese debt in the past few years has focused on bond exchange-traded funds (ETFs) and so-called Formosa bonds, securities listed in Taiwan, but denominated mainly in US dollars, KGI Securities Co (凱基證券) executive vice president Alvin Yang (楊宗威) said.
“What’s special this year is life insurers will be interested in buying local corporate bonds,” he said.
Beyond demand, also expected to keep yields low — and companies inclined to offer bonds — is the COVID-19 outbreak curbing near-term global economic growth, especially in the China region.
Firms looking to take advantage include Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), by far the nation’s biggest company by market value.
It said earlier this month that it plans to raise as much as NT$60 billion for capacity expansion and pollution-prevention measures.
Other corporate debt has been hitting the market. TSMC and Chunghwa Telecom Co (中華電信), the nation’s largest wireless operator, have recently held their first sales of commercial paper, a shorter-term funding vehicle.
Chunghwa is planning to hold such sales regularly, a spokesperson said.
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