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May 26, 2017

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Hon Hai announces plans to issue NT$6 billion in bonds

TAIPEI--Hon Hai Precision Industry Co., the world's largest contract electronics maker, plans to issue NT$6 billion (US$198 million) worth of unsecured straight bonds as part of its efforts to cut short-term debt.

The NT$6 billion corporate bond sale plan was approved by Hon Hai's board of directors Friday, the company said.

According to the Taiwan Stock Exchange, Hon Hai shouldered NT$330.39 billion in short-term debt, which carried a maturity of less than one year, as of the end of September, down from NT$370.60 billion recorded a year earlier.

Hon Hai, which assembles iPhones and iPads for Apple Inc., also had long term debt worth NT$37.15 billion as of the end of September, up from NT$33.08 billion registered a year ago.

The Taiwanese electronics giant said the NT$6 billion worth of bonds will comprise four tranches: three-year bonds with a fixed rate of 1.23 percent, five-year bonds with a fixed rate of 1.40 percent, seven-year bonds with a fixed rate of 1.75 percent, and 10-year bonds with a fixed rate of 2.0 percent.

In December, Hon Hai also issued NT$6 billion worth of bonds, aiming to repay its short-term debt. The three tranches of the bonds carried higher interest rates: three-year bonds with a fixed rate of 1.35 percent, five-year bonds with a fixed rate of 1.50 percent and seven-year bonds with a fixed rate of 1.87 percent.

Industry analyst firms were mostly optimistic about Hon Hai's performance prospects for this year.

Citigroup Global Markets said in a recent research report that Hon Hai is expected to benefit from the launch of a new generation iPhone by Apple later this year.

The brokerage said Hon Hai is expected to secure orders from Apple to assemble 90 million new iPhones this year. That has prompted Citigroup to set a target price of NT$112 for Hon Hai shares, the highest among the foreign brokerages which track the Taiwanese company.

Shares of Hon Hai rose 0.36 percent to close at NT$84.70 on the main board, where the benchmark weighted index ended up 0.17 points at 8,713.96 Friday.

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