Shin Kong Financial Holdings Co (新光金控), the owner of Taiwan's No. 2 life insurer, may raise as much as US$588 million by selling US and New Taiwan dollar bonds by the end of June, to take advantage of low borrowing costs.
The company, whose directors approved the fundraising plan on Friday, may offer local investors as much as NT$5 billion (US$144 million) of subordinated debt and NT$5 billion of bonds convertible into its shares. The company may also sell as much as US$300 million of convertible bonds to foreign investors, it said.
"Most people are expecting interest rate hikes in the second half, so if we look at cost considerations, the first half might be better timing," said Executive Vice President Jack Lee. The company is in talks with a few foreign investment bankers to possibly manage the overseas bond sale, Lee said.
Taiwan's central bank cut its key rediscount rate by more than half to a record-low 2.125 percent between December 2000 and December 2001, in line with similar moves by the US Federal Reserve.
Shin Kong Financial, which is undecided on whether it will sell the debt at the same time, recently took over closely held PowerWorld Securities Co (力世證券) and needs funds to expand into other financial services such as commercial lending and asset management. The company was formed after it took control of Shin Kong Life Insurance Co (新光人壽) and started trading as a financial holding company Feb. 19.
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