Taipei, Feb. 16 (CNA) U.S. consumer electronics giant Apple Inc. is set to issue corporate bonds in Taiwan, aiming to raise US$1 billion, market sources said on Thursday.
The sources said that the bonds, with a 30-year maturity, are scheduled to be listed on the Taiwan market on March 3.
This is the second time Apple has raised funds through bond sales in Taiwan after issuing US$1.38 billion in June 2016. The first bond sale generated more than the US$1.2 billion Apple had targeted due to enthusiasm from Taiwanese investors.
The US$1 billion bonds Apple is planning to issue have been priced at a coupon rate of 4.3 percent, higher than the 4.15 percent in the first bond sales since the U.S. Federal Reserve raised its key interest rates in December, the sources said.
According to the sources, several major Taiwanese life insurers, which have plenty cash on hand and are eager to seek investments, have subscribed to more than 96 percent of the new Apple bonds in the expectation that the Fed's rate hike cycle will continue to boost returns.
The sources said that Nan Shan Life Insurance Co. (南山人壽) is the largest buyer of the Apple bonds with a subscription of US$300 million.
The bond sale is being managed by the Taipei branch of Deutsche Bank AG, while Goldman Sachs, Morgan Stanley and Merrill Lynch, Pierce, Fenner & Smith Inc. are serving as structuring agents.
The sources said that Apple is expected to use the proceeds from the bond sale in Taiwan for its share buyback program or to dole out cash dividends to shareholders.
With the Apple bonds so well received by Taiwanese investors, several international firms are seeking to follow suit and sell bonds in Taiwan, the sources said.
For example, U.S-based telecom operator AT&T Inc, and its U.K. counterpart Vodafone Group Inc. as well as American pharmaceutical giant Pfizer Inc. have expressed interest in issuing bonds and raising funds in Taiwan, the sources added.
The sources said that AT&T and Vodafone are likely to price their bonds at a coupon rate of about 5 percent, while the coupon rate for Pfizer be around 4.3 percent.
Local life insurance companies are looking forward to bond sales by these international brands at a time when major Taiwanese institutional investors have turned away from Chinese yuan-denominated assets as the yuan has weakened against the U.S. dollar.
(By Tien Yu-pin and Frances Huang)