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Taiwan's TSMC set to issue its first green bond

Fixed-rate bond will vary in maturity from 5 to10 years

TSMC Tainan office building (Reuters photo)

TSMC Tainan office building (Reuters photo)

TAIPEI (Taiwan News) — Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, is for the first time slated to issue a green bond worth NT$12 billion (US$400 million) in order to finance investments in sustainable architecture and eco-friendly manufacturing.

The green bond is expected to go public in December, with Capital Securities Corp. to serve as the underwriter.

The company issued several rounds of unsecured corporate bonds earlier this year in response to its capacity expansion plan, including an NT$60 billion bond in the first half of 2020, an NT$13.9 billion bond in July, an NT$15.6 billion bond in August, and a US$3 billion bond in September for TSMC Global. The semiconductor foundry has obtained a total of NT$170 billion (US$5.96 billion) through the issuing of bonds.

Over the years, TSMC has pursued renewable energy as its American customers, such as Apple, Google, Microsoft, and Amazon, are committed to reducing their carbon footprints over their lifetime production cycles. The company has pointed out it is Taiwan's largest buyer of renewable energy and signed a procurement deal for a total of 1.2 GW of renewable energy in July 2020, equivalent to cutting 2.18 million tons of CO2 emissions every year since 2015.

The green, fixed-rate bonds vary in term and include the five-year green bond worth NT$1.6 billion, the seven-year bond worth NT$5.6 billion, and the 10-year bond worth NT$4.8 billion. In terms of returns, the three offer interest rates of 0.4 percent, 0.44 percent, and 0.48 percent, respectively, the company said.

TSMC has spent over NT$10 billion on green projects every year since 2013. The figure skyrocketed to nearly NT$20 billion in 2019.

Separately, the latest IC Insights report indicates that TSMC is expected to rank as the world's third-largest semiconductor supplier following Intel and Samsung. It will experience a revenue increase of 31 percent this year.