TDK Corp, the world's largest maker of disk-drive heads, may sell as much as 200 billion yen (US$2 billion) of bonds to fund its acquisition of Germany's Epcos AG, an insider said.

The Tokyo-based company will decide on details of the bond sale in November, according to the insider, Bloomberg News reported.

TDK's first bond sale in almost 21 years would test investor appetite amid a global financial crisis that has raised borrowing costs and slashed issuances. The company, which has announced at least five acquisitions since last year, agreed in July to buy Munich-based Epcos for 1.2 billion euros (US$1.6 billion) to help cut its reliance on magnetic heads and boost European sales.

"We're seeing deteriorating risk tolerance with many Japanese investors," Fumihito Gotoh of UBS AG in Tokyo, ranked the nation's top credit analyst in a Nikkei Veritas survey in March, said. Still, "investors need somewhere to put their money."

Epcos and TDK said in July the cash purchase will probably be completed by October. The Japanese company said on October 13 it had received acceptances for 83.9 percent of Epcos shares.

"We are considering several common sense options for raising the funds, but nothing has been decided," TDK Chief Executive Officer Hajime Sawabe said yesterday.

TDK said it last issued debt in November 1987 by selling 30 billion yen of convertible bonds.

27 percent more

The company had 40 billion yen of debt by the end of June, 27 percent more than Epcos's 235.2 million euros, according to the companies' statements. TDK had about 186 billion yen of cash and equivalents by June 30.

TDK doesn't have any bonds coming due this year, according to data compiled by Bloomberg News. The company said in April it plans to cut capital spending 17 percent to 70 billion yen in 2008.