STMicroelectronics to Raise $1.5B Convertible Bonds as Shares Double

According to a company statement, STMicroelectronics is planning to raise approximately $1.5 billion through the issuance of convertible bonds, which can be converted into shares at pre-agreed prices. The move comes after the chipmaker’s stock has surged roughly twofold year-to-date.

The company will issue the convertible bonds in two tranches, maturing in 2031 and 2033 respectively. Proceeds will be primarily used to redeem a $750 million zero-coupon bond due in 2027, while the remaining funds will be allocated to general corporate purposes.

STMicroelectronics has benefited from strong demand for data center semiconductors, with its shares climbing nearly 200% so far this year, making it one of the top-performing stocks in the STOXX Europe 600 index. The company serves major customers including Tesla, Apple, and Amazon Web Services (AWS), and has expanded its business footprint from consumer electronics and automotive chips into fast-growing segments such as data center infrastructure.

Last month, the company indicated that revenue from its data center business is expected to reach $1 billion this year, significantly higher than its earlier projection of above $500 million, driven by accelerating demand for artificial intelligence infrastructure.

The recent rally has also pushed the company’s share price well above the $45.10 conversion level of its 2027 maturing bonds. The refinancing structure is expected to reduce potential equity dilution, as investors are more likely to opt for debt redemption rather than conversion under current pricing conditions.

For the 2031 maturity tranche, the convertible bonds will carry a fixed coupon of 0% to 0.5%, with a conversion premium set between 47.5% and 52.5% above the reference share price. The 2033 tranche will feature a fixed interest rate of 0.625% to 1.125%, with a conversion premium ranging from 50% to 55%.