Taiwanese company Siliconware Precision Industries raised $400 million through a zero-coupon convertible bond on Tuesday night.
The deal has a five-year maturity with a three-year investor put and an issuer call after three years.
It offers a 1% yield and closed with a conversion premium of 27.5% to Tuesday's closing price of NT$41.65, at the bottom of the guidance of 27.5% to 35%.
The conversion price was set at NT$53.10, at the bottom end of the initial range of NT$53.10 to NT$56.23. The credit spread was 200 basis points. The bonds are due on October 31, 2019.
JP Morgan, the sole global coordinator and bookrunner, launched the bond offering with a base size of $300 million late Tuesday afternoon, with an over-allotment of $100 million. Strong demand allowed the issuer to exercise the fully upsize option and boost the deal size to $400 million.
The book was heavily anchored and three times covered, with a total of 75 lines participating in the convertible bond. More than half of the investors were outright, with the remainder made up of hedge funds.
Regionally, some 50% of the investors are based in Europe and an additional 10% from the US.
The rest were in Asia, according to the source. Some investors planned to short in the market to hedge their positions, with about 1% to 1.5% borrow in the market, and about 3% slippage.
In total, there was over $1 billion in orders for the company, which is very promising considering the current market conditions, the source noted. “Market volatility has hurt a lot of deals in the primary market recently. But this one had very strong demand and strong participation,” the source said. It was the largest sole convertible bond offering so far this year, according to Dealogic.
After peaking on July 7 at NT$55.30, shares in Siliconware have dropped 24%, although the source noted the deal "priced at par and was in the grey slightly above par, reflecting strong demand and efficient pricing".
The Taichung-based company, which focuses on semiconductor packaging and testing services for PC, communications and consumer integrated circuits markets, will use proceeds to purchase raw materials denominated in foreign currency and repay some long-term loans.
Siliconware reported net income of NT$3.3 billion ($108.7 million) in the third quarter, a 50% increase from the same period a year before. The company’s debt stood at NT$45.2 billion at the end of the third quarter this year, up from NT$40.9 billion in the third quarter 2013.
