TSMC to Issue NT$35 B. of Corporate Bonds

Aug 10, 2011 Ι Industry In-Focus Ι Electronics and Computers Ι By Philip Liu, CENS
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Taipei, Aug. 10, 2011 (CENS)--In order to secure long-term low fixed-rate fund, Taiwan Semiconductor Manufacturing Corp. (TSMC) will issue up to NT$35 billion of unsecured common corporate bonds, resolved the company's board of directors yesterday (Aug. 9).

A TSMC spokesman reported yesterday that the corporate bonds will give the company more flexibility in fund maneuvering. This is the first time for the company to issue unsecured common bonds in more than nine years.

A financial manager remarked that the corporate bond issuance may mirror the company's outlook for rising fund cost and a weakening U.S. dollar. He predicted that due to the outstanding performance of TSMC, banks will scramble to subscribe to the bond.

The semi-annual report of TSMC shows that as of the end of June, the company still had NT$151 billion of cash in hand, which is more than enough to fund the company's projected capital outlay of US$2.4 billion in the second half. The company's capital outlay reached US$5 billion in the first half. The company has revised its projected capital outlay from the original goal of US$7.8 billion to US$7.4 billion.

Some institutional investors noted that the projected corporate bond issuance will enable the company to build up massive NT-dollar position, capable offsetting the risk exposure from the depreciation of U.S. dollar. Under the latter situation, the company can convert its NT dollar holdings into U.S. dollars for the procurement of equipment and materials, thereby winning substantial benefits from the exchange-rate differential.
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