Taiwan's Hon Hai launches $1 bln bond-IFR

TAIPEI, Sept 30 (Reuters) - Hon Hai Precision (2317.TW), maker of Apple's (AAPL.O) iPhones, launched a long-awaited three-year $1 billion zero-coupon convertible bond, the largest from a Taiwan issuer, IFR said on Thursday.

The bonds will carry a conversion premium of 30 percent over Hon Hai's T$117.50 closing share price on Thursday. They do not pay any yield or coupon, but are fully asset swappable.

Bankers said the books were already covered at launch and the bonds were trading just above par in the grey market, according to IFR.

The world's largest electronics parts maker had been planning a big CB since the start of the year, but had not been able to find a balance between its own funding targets and investor appetite, IFR said.

After two abortive attempts to come to market earlier this year, Hon Hai revised terms for the bond in July, IFR said.

The company is planning to move its plants into China's interior as it seeks, like other global manufacturers, to escape rising labour costs in the traditional manufacturing belt of southern China.

Hon Hai and its Hong Kong-based Foxconn (2038.HK) unit have struggled this year with the fallout from a series of suicides at a manufacturing site in southern China. The issues prompted the company to raise wages and seek to move inland.

IFR said three groups of banks were bidding for the mandate. Bank of America Merrill Lynch, Citigroup, Barclays and Nomura are in one group and Morgan Stanley and DBS Bank in another.

The group in which Credit Suisse and Standard Chartered figured also had included Deutsche Bank and Mizuho, but the two were missing from the final mandate, IFR said.

Hon Hai first tried to raise $1 billion through a five-year zero coupon CB in January, sounding out investors on terms that offered a yield of negative 1 percent to positive 1 percent and a conversion premium of 20 percent to 40 percent.

IFR said those terms were considered aggressive, and Hon Hai revised the terms in June, changing the yield to up to 2 percent and the premium to 15 percent to 40 percent. It revised the terms again in July. (Reporting by Shankar Ramakrishnan; editing by Jonathan Standing)