German semiconductor manufacturer Infineon Technologies AG have introduced and priced its inaugural €1.2 billion (US$1.3 billion) dual-tranche hybrid bond. The proceeds from the issuance will be used to refinance the proposed Cypress acquisition and for general corporate purposes.

"With the hybrid bond issuance, which is following our share placement in June, we have taken a further significant step in refinancing and de-risking the Cypress transaction," said Dr. Sven Schneider, Chief Financial Officer of Infineon. "The instrument is contributing substantially to the envisaged equity portion of the overall financing. The issuance clearly shows investors' trust in the prospects of Infineon as well as the future combined company and puts us in a position of great flexibility with respect to timing and instruments for the remaining re-financing needed."

The hybrid bond issuance consists of two €600 million perpetual tranches. Tranche 1 has a non-call period from issuance of 5.5 years and a fixed coupon of 2.875 percent until first reset date. Tranche 2 has a non-call period of 8.5 years and a fixed coupon of 3.625 percent. The bonds will be listed on the Luxemburg Stock Exchange.

The order book for both hybrid tranches was well oversubscribed enabling a diversified distribution among international institutional investors including fund managers, insurance companies, pension funds and banks.