The world’s largest contract electronics manufacturer is making its debut at the parent company level in the syndicated loan market in Taiwan with a NT$30bn (US$950m) borrowing linked to sustainability metrics.
Hon Hai Precision Industry, a contract manufacturer for technology behemoths such as Nvidia and Apple, has never tapped a syndicated loan in Taiwan dollars, according to LSEG LPC data. Nor has it raised any loans linked to sustainability.
It is not clear what the rationale is for doing so now, particularly as Foxconn, as it is better known, does most of its business in US dollars and the loan is small relative to the mountain of cash it sits on. As of September 30, its cash and cash equivalents totalled NT$865.3bn, according to its third-quarter report.
That is nearly three-quarters of the US$37.55bn raised in the loan market in Taiwan in the first nine months of 2025, according to LSEG LPC data.
“We maintain a flexible financing strategy to identify the most cost-effective funding sources, including domestic and international bond markets, convertible bonds and syndicated loans,” the company said in an email. “Foxconn remains highly flexible in our funding approach to support long-term growth."
During Hon Hai's first-quarter earnings call with investors in May it said it expected capital expenditure to increase by 20% this year from 2024.
“The amount being raised is small in proportion to its cash pile. Still, over the past two years we have seen companies that don’t have immediate needs for funding are coming out to the syndicated loan market regardless,” said a senior banker in Taipei.
They include Formosa Plastics Group and Taiwan Mobile, the second-largest telecoms operator, both of which tapped the loan market in late 2023 after absences of more than a decade.
Although it has never tapped the domestic currency syndicated loan market in Taiwan, Hon Hai is a frequent issuer of bonds at home. Last month, it printed a NT$7.9bn 10-year bond with a 1.77% coupon following a NT$3.5bn three-year bond with a 1.85% coupon in August. As of December 2, Hon Hai had NT$382bn-equivalent outstanding from 92 bonds, including NT$262.4bn in local currency, according to LSEG data.
In October, it made its debut in the euro bond market, selling a €650m six-year bond at a yield of 3.186%, or mid-swaps plus 80bp.
In international loan markets, Hon Hai is a more familiar name as its subsidiaries regularly raise financings. In May, General Interface Solution Holding, its touch panel manufacturing subsidiary, increased a five-year refinancing linked to ESG metrics to US$360m after attracting seven banks in general syndication.
In November last year, three Singapore-based units of Hon Hai – Foxconn Singapore, Falcon Precision Trading and ECMMS Precision Singapore – closed a US$1.1bn three-year loan after drawing five banks in syndication. Hon Hai is the guarantor.
Hon Hai borrowed in yen and US dollars more than a decade ago.
Top credit
Domestic lenders in Taiwan are keen to lend to Hon Hai given its strong credit profile.
Hon Hai’s market capitalisation is more than NT$3trn, skyrocketing from NT$3bn when it listed in 1991, according to the company's email, with net profits ballooning to NT$150bn from NT$200m in that period.
Additionally, its expansion into data centres in recent years as the maker of AI server racks for Nvidia has turbocharged its outlook.
According to one banker, Hon Hai is among fewer than 10 companies rated between Grade 1 and 3 under the Taiwan Corporate Credit Risk Index, a nine-grade credit rating system that domestic banks regularly refer to when assessing creditworthiness of borrowers.
While Hon Hai has an international rating of A− (S&P), it is a Grade 2 credit under TCRI and its closest comparable is semiconductor packaging and testing company ASE Technology, according to bankers. In June, ASE increased a five-year loan linked to ESG metrics to NT$50bn after drawing a strong response from 16 banks in syndication.
ASE returned to the loan market after nearly a seven-year hiatus, attracting interest despite a margin of 37bp over Taibor, well inside the 55bp it paid for a NT$90bn five-year loan in 2018.
Similarly, Taiwan Mobile and units of Formosa Plastics were able to achieve tight pricing on their borrowings in 2023. Taiwan Mobile’s NT$15bn five-year SLL paid a razor-thin margin of 18bp in November 2023.
Taiwan Mobile was considered a Grade 2 credit, while ASE is Grade 3 and the units of Formosa Plastics were Grade 3 and 4.
Tight pricing
Like those borrowings, Hon Hai’s deal is expected to be well received despite tight pricing. The three-year revolving credit facility has a two-year extension option and pays a margin of 35bp over Taibor. The borrower is eligible for a maximum reduction in the margin of 2bp if it achieves two of the three sustainability metrics.
They are an annual reduction in greenhouse gas emissions, an increase in its renewable energy use, and a minimum “gold designation” for the UL2799, which is a standard for validating zero waste to landfill.
Coordinating arrangers committing at least NT$4.5bn will receive a top-level upfront fee of 6bp, while managers with NT$3bn–$4.49bn will earn 4bp. Participants joining with NT$1.5bn–$2.99bn will be offered 2bp.
Bank of Taiwan, CTBC Bank, Mega International Commercial Bank and Taipei Fubon Commercial Bank are mandated lead arrangers and bookrunners, with Taipei Fubon also ESG coordinator, and CTBC and Mega as ESG managers. BoT is facility agent.