Taiwan’s corporate bond issuance this year has hit a seven-year low, as companies scale back offerings on expectations that local interest rates have peaked and could move lower.
Taiwanese companies issued US$533 million of New Taiwan dollar bonds last month, a third of the total a year earlier, Bloomberg-compiled data shows. Total issuance from January to last month fell to US$9.02 billion, the lowest level since 2017.
Those numbers do not include life insurers, which have issued a record number of subordinated bonds to meet capital requirements and have attracted buyers with the notes’ higher-than-average yields.
Photo: Wu Chia-ing, Taipei Times
The broader slowdown contrasts with the bond market bonanza seen in most of the rest of Asia, where issuance has surged on increasing appetite for yield. Taiwan’s interest rates sit at a 16-year high of 2 percent, making nonfinancial firms reluctant to issue bonds.
“Companies take account of global market conditions when making capital and cost allocations,” Hua Nan Securities (華南永昌證券) fixed income trader Sam Chang said.
As the Federal Reserve and other central banks start looking toward policy easing, companies are waiting to see if those decisions would also influence Taiwan, he added.
Also potentially denting investor demand are the subordinated bonds issued by insurers.
Domestic bond investors have allocated a lot of capacity to bonds issued by Taiwanese life insurers, so that could also have some implications on demand, Taiwan Ratings Corp (中華信評) senior director Andy Chang (張書評) said.
With the timing of any rate cut in Taiwan uncertain, some companies are seeking out alternative funding routes, such as bank loans and commercial paper.
Commercial paper issued by Taiwanese companies rose 15 percent in the first six months of the year to NT$10.4 trillion (US$317 billion), compared with the same period last year, central bank data showed.
“For bank loans, large corporates have nice bargaining power as the banking environment is quite competitive,” Andy Chang said.
Commercial paper comes in shorter tenors, providing cheaper costs under the current yield curve, he added.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Quanta Computer Inc (廣達) chairman Barry Lam (林百里) is expected to share his views about the artificial intelligence (AI) industry’s prospects during his speech at the company’s 37th anniversary ceremony, as AI servers have become a new growth engine for the equipment manufacturing service provider. Lam’s speech is much anticipated, as Quanta has risen as one of the world’s major AI server suppliers. The company reported a 30 percent year-on-year growth in consolidated revenue to NT$1.41 trillion (US$43.35 billion) last year, thanks to fast-growing demand for servers, especially those with AI capabilities. The company told investors in November last year that
Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said it plans to ship its new 1 megawatt charging systems for electric trucks and buses in the first half of next year at the earliest. The new charging piles, which deliver up to 1 megawatt of charging power, are designed for heavy-duty electric vehicles, and support a maximum current of 1,500 amperes and output of 1,250 volts, Delta said in a news release. “If everything goes smoothly, we could begin shipping those new charging systems as early as in the first half of next year,” a company official said. The new
RSS