SINGAPORE • Stats ChipPac, South-east Asia's biggest semiconductor assembler, is seeking to refinance US$400 million (S$569 million) of debt in the first test of its credit strength without the implicit AAA backing of the Singapore government.

The chip packaging and testing company plans to sell dollar-denominated bonds due in five years to help repay part of an US$890 million bridge loan, chief financial officer Woo Kwek Kiong said in an e-mail interview.

The company is now seeking a US$500 million syndicated loan to pare the bridge loan from DBS.

The planned note offering comes after Temasek Holdings cashed out from Stats ChipPac last month by accepting a takeover bid from Chinese firm Jiangsu Changjiang Electronics Technology .

Temasek's departure triggered two rating downgrades by Standard & Poor's just as financing costs of lower-rated borrowers in Asia are rising amid renewed global market jitters.

"The interest rate of any bond issued by the company will be in line with outstanding bonds issued by comparable companies in a similar industry and ratings category," Mr Woo said.

Stats ChipPac is banking on strong support from strategic shareholders like JCET and Semiconductor Manufacturing International, who are declared "national champions" of the industry in China, Mr Woo said.

The company's steps come amid the slowest economic growth since 1990 in China and as the industry experiences a sluggish order book in North America.

At BB-, or three steps below investment grade, Stats ChipPac may have to pay 4.5 per cent to 5 per cent to sell the notes, according to Charles Macgregor, head of Asian high yield research in Singapore at Lucror Analytics.

BLOOMBERG