Hynix to sell $500 million of bonds

Hynix Semiconductor Inc., the world’s second-largest memory chipmaker, hired five banks to sell at least $500 million of high-yield bonds, according to Fitch Ratings and an e-mail sent to investors. Citigroup Inc., Credit Suisse Group, Goldman Sachs Group Inc., Korea Development Bank and Merrill Lynch & Co. are managing the sale of the senior unsecured debt, according to the e-mail.
Standard & Poor’s and Fitch said today the company plans to sell 10-year securities to replace seven-year bonds sold in 2005. S&P rates the new bonds BB-, three levels below investment grade. Fitch ranks them one step higher at BB.
The rating “reflects the severe pricing pressures and the cyclical, capital-intensive nature of the commodity DRAM industry from which the company derives the bulk of its revenue,” Kwon Jae-min, a Tokyo-based analyst with S&P, said in a statement. Hynix’s dominant market position in the industry helps mitigate the risks, Kwon said.
Hynix has 22 percent market share in the global dynamic random access memory, or DRAM, industry, after market-leader Samsung Electronics Co., which has a 26 percent share, according to S&P.