Taiwan semiconductor company United Microelectronics Corporation UMC created a stir in the markets yesterday with two zero-coupon exchangeable bonds that were both offered at a negative yield. According to bankers, such a feature, while used previously by issuers in Taiwan and Hong Kong, hasn't been seen in Asia since early 2004 at least.
However, after the initial scepticism, investors were happy enough to buy the bonds, helped by UMC's relatively strong credit and the fact that sole bookrunners Credit Suisse provided enough asset swap to cover the entire deal. The deal also included a short put after just two years, which resulted in a high bond floor that added further to the attraction....
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