Taiwan's ASE hits sweet spot with Asia's first green bond
Rare offshore bond from Taiwanese company receives strong demand for its tenor and credit
Taiwan's Advanced Semiconductor Engineering yesterday was in the market with a three-year senior bond to raise up to US$300 million.
In the case of this deal, that meant the issuer pledged to use proceeds to improve the energy and water efficiency of its operations. A non-profit Norwegian environmental group called the Centre for International Climate and Environmental Research - Oslo reviewed and approved the firm's spending plans.
Bond funds will be paid out of a special account and the company will release a yearly report on the use of these funds on its website.
The bond was well received, with order books closed yesterday after the deal generated US$2 billion in orders, and was heading for final pricing of about 135 basis points over Treasuries versus guidance at launch of 150 basis points.
A banker close to the offer said demand was strong for non-green reasons. He said it hit the sweet spot in terms of tenor and credit. Bond investors want yield but they are concerned about rising interest rates.
At three years the bond's maturity was short enough to limit investors' duration risk, but long enough to satisfy their yield requirements.
