SK Hynix raises $1.7 billion convertible bond amid chip glut

SEOUL (Reuters) - South Korea's SK Hynix, the world's second-largest memory chip maker, has raised $1.7 billion in a convertible bond deal that comes as chipmakers' profits suffer due to a global semiconductor glut driven by an economic slowdown.

The money will be used for operational funds such as buying chip production materials, SK Hynix said in regulatory filing on Tuesday. It earmarked 20.1 million treasury shares, or a 2.8% stake, for possible conversion.

The bonds, to be listed in Singapore, have a coupon of 1.75% a year and will mature in 2030, according to a separate term sheet seen by Reuters.

Shares in SK Hynix fell as much as 4% in Tuesday trade, while the wider market rose 0.4% as of 0238 GMT.

SK Hynix posted a record quarterly operating loss of 1.7 trillion won ($1.38 billion) in the September-December quarter.

Analysts forecast a much worse loss in the quarter ended March 31 before an expected memory chip industry rebound in the second half of the year.

"This financing is expected to end market concerns about a short-term liquidity crunch," Kim Kwang-jin, an analyst at Hanwha Investment & Securities, wrote in a note on Tuesday.

($1 = 1,308.0600 won)

(Reporting by Joyce Lee; Editing by Himani Sarkar and Jamie Freed)