Taipower to Issue NT$10 B. in Corporate Bonds

Taipei, Sept. 11, 2009 (CENS)--To ride on the wave of the low-level primary interest rates, large-sized domestic companies, including the state-run Taiwan Power Company and CPC Corporation, Taiwan, have resolved to issue corporate bonds to lock in low-interest costs in the long term.

Taipower will issue NT$10 billion (US$303.95 million at US$1:NT$32.9) secured corporate bonds at an annual interest rate of 0.8%, which will hit the lowest level among the existing corporate bonds.

The corporate bonds to be issued by Taipower will have three trenches, including NT$2 billion (US$60.79 million) for three-year term, NT$4 billion (US$121.58 million) for five-year term, and another NT$4 billion (US$121.58 million) for 10-year term. Taipower has retained the right to increase or decrease the issuance amount by 30%.

As Taipower is demanding fresh funds to facilitate its longer-term development, a domestic securities firm believed the issuance volume of Taipower's secured corporate bonds will be hiked to NT$13 billion (US$395.13 million) from originally set NT$10 billion (US$303.95 million).

As Taipower bears good credit rating, many domestic firms with a pool of cash are quite interested in buying its corporate bonds. In mid-July, Taipower issued three-, five- and seven-year-term corporate bonds bearing annual interest rates of 0.97%, 1.43% and 1.7%, respectively.

Since the middle of July, the yield rate for government bonds has slipped by at least 10 basis points. Judging from the market response, the interest rates for the secured corporate bonds issued by Taipower will be set at the average interest rate for existing corporate bonds plus 45 basis points.

On another front, CPC is expected to issue NT$20 billion (US$607.9 million) corporate bonds in mid-September. Far Eastern Textile Co. plans to issue five-year NT$3 billion (US$91.18 million) corporate bonds in the foreseeable future.