The amount of capital raised by public companies in Taiwan fell substantially in the first half of this year as rising inflation led to rate hikes from the central bank, according to the Financial Supervisory Commission (FSC).
The capital raised by public companies in the first six months of this year plunged more than 25 percent from a year earlier, with another factor being reduced bond sales from contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), the FSC said.
Data compiled by the FSC, the top financial regulator in Taiwan, showed that public companies raised a total of NT$338.81 billion (US$13 billion) from the market during the January-June period, down 27.76 percent from a year earlier, when fundraising hit NT$468.98 billion.
However, the data also indicated that the number of fund-raising deals in the six-month period rose by 13.53 percent from a year earlier to 193.
Out of the total capital raised of NT$338.81 billion, about NT$293.81 billion were raised in the local market, with the remaining NT$44.99 billion raised overseas, the FSC said.
Taiwan’s central bank, similar to other central banks in the world, has embarked on a rate hike cycle since March to tackle rising inflation, dampening the willingness of public companies to raise funds, said Chang Tzu-min (張子敏), deputy director of the FSC’s Securities and Futures Bureau.
In March, the central bank raised its key interest rate by 25 basis points before an additional 12.5 basis point hike in June. Market analysts said the central bank is expected to implement more interest rate increases in September and December.
The U.S. Federal Reserve (Fed) has raised interest rates by 150 basis points since March, and an additional 75 basis point hike is widely anticipated for later this month.
Chang said TSMC, the world’s largest pure wafer foundry operator, slowed down its fundraising this year for production expansion after it had raised its highest-ever amount from bond sales in 2021.
According to the FSC, the chipmaker raised only NT$82.7 billion in the first half of this year, the lowest in three years and a decrease of NT$65.5 billion from NT$148.2 billion over the same period of last year.
The FSC said public companies’ fundraising activities in the previous six months were largely aimed at repaying debts with about NT$154.097 billion raised for this purpose.
The FSC added that some of the public companies which raised funds during these six months spent NT$82.73 billion on expanding production capacity.
Compared to the fall in overall fundraising among public companies, the FSC said the amount of funds raised in private placement deals in the first half of this year soared by 140.3 percent from a year earlier to NT$55.07 billion while the number of private placement deals also grew by 40.48 percent to 59.
The prominent private placement deals this year included a NT$10 billion deal by Cathay Century Insurance to boost its capital size.
Public companies favored the sales of straight bonds to raise funds, which totaled NT$164.69 billion in the six-month period, followed by rights issue cases, which raised NT$74.57 billion, and sales of convertible bonds worth NT$54.55 billion, the FSC said.
Source: Focus Taiwan News Channel