Corporate bond issuance last year hit a record NT$813.19 billion (US$28.55 billion), up 106 percent from a year earlier, as companies took advantage of lower interest rates to repay old debt or fund new investments, Taipei Exchange (TPEX) data showed.
Straight bond issuance totaled 209 last year, valued at NT$743.59 billion, up 109 percent from NT$354.85 billion in 2019, while convertible bond issuance totaled 100, valued at NT$69.61 billion, up 71 percent from NT$40.6 billion, the data showed.
All of the straight bonds issued were fixed rate, with five-year bonds accounting for 41 percent, seven-year bonds 23 percent and bonds maturing in more than 10 years making up 24 percent.
Most of the straight bonds’ coupon rates fell below 1 percent in line with the central bank’s rate cuts.
The lowest was 0.36 percent — Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) NT$1.9 billion bond issue last month, which was rated “twAAA” by Taiwan Ratings Corp (中華信評), the data showed.
Most of the straight bonds with coupon rates of more than 1 percent had a longer maturity, such as Taiwan High Speed Rail Corp’s (台灣高鐵) NT$10.5 billion 30-year bonds with a coupon rate of 1.3 percent, the data showed.
“It was not surprising that corporate bond issuance rose last year, as even though companies did not have plans for expansion or new investments, they could borrow money to repay old debt, which would be more economical,” a TPEX official said by telephone.
Whether bond issuance would maintain its strong growth this year remains to be seen, the official said, adding that if the low interest environment continues, it might provide an incentive for new bond issuance.
The biggest bond issuer last year was TSMC, with NT$120 billion, followed by Taiwan Power Co (台電) with NT$84.1 billion, and Fubon Financial Holding Co (富邦金控), with NT$40 billion, TPEX data showed.
Meanwhile, 51 financial debentures were issued last year, for a combined value of NT$183.64 billion, representing an increase of 19 percent from a year earlier, TPEX data showed.
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