Connector maker to raise €550m with zero interest
Swiss connector and sensor maker TE Connectivity is aiming to raise €550m at an interest rate of zero, marking major opportunity for electronics companies in the Covid-19 recovery.
The senior notes would be redeemed in 2029 and are intended for general corporate purposes at the company, formerly Tyco Electronics. However the deal makers will still make money, as the notes will be issued at a price of 99.101 percent of face value.
The offering is expected to close on February 16, 2021, when the popularity of zero interest will be tested.
This isn’t the first time zero interest rates have been offered. Back in 2002 after the dotcom crash, Berkshire Hathaway successfully raise $400m at an interest rate of zero for its ‘Squarz’ bonds with an offer to buy its shares at the end of the deal. Berkshire went on to buy distributor TTi, owner of Mouser, in 2007, and battery maker Duracell in 2014.
In comparison, Broadcom is offering its senior notes due in 2028 at 1.950 percent. The interest rates are dependent on the credit rating of companies, which are also looking to refinance their existing debt and also fund production capacity and acquisitions.
TE Connectivity had a turnover of $12bn last year and employs 80,000 staff with over 7,500 engineers globally. Subsidiaries include the Tyco Electronics companies, as well as AMP, First Sensor, Raychem and Silicon Microstructures.
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