Formosa bond

Formosa bond

A Formosa bond is a non-New Taiwan Dollar-denominated bond issued in Taiwan by a foreign institution.cite paper|url=http://www.otc.org.tw/storage/bond_download/international_bond/Q&A.pdf|publisher=GreTai Securities Market|title=Taiwan Foreign-Denominated Bond Market Q&A|format=PDF|accessdate=2007-07-04]

History

The major designer and promoter of the Formosa bond was Lee Shyan-yuan, a board member of Taiwan's market regulator, the Financial Supervisory Commission.cite news|publisher=Taipei Times|date=2007-04-19|accessdate=2007-07-04|title=BNP Paribas mulls second bond issue on offshore market|last=Chung|first=Amber|url=http://www.taipeitimes.com/News/biz/archives/2007/04/19/2003357355] The name refers to Formosa, an alternative name for the island of Taiwan; it was chosen as the result of a contest held in September 2006 by the FSC. 15 names were suggested, intended to reflect special characteristics of Taiwan; two different Chinese-language versions of the name "Formosa bond" were suggested, as well as "C-Wang Bond" and "High-Tech Island Bond". Participants were also invited to suggest their own names for the bonds. [cite news|title=櫃買中心債券國際板10月上路　命名活動烈展開 (GTSM bond market international board to open in October; naming contest to be held)|publisher=Eastern Television|url=http://news.yam.com/ettoday/fn/200609/20060911304090.html|date=2006-09-11|last=Yang|first=Ling-wen|accessdate=2007-07-04] The result of the contest was announced on 25 September 2006; "Formosa Bond" was the most popular choice, with 5,776 votes, or 57.16% of the total cast; the second-most popular choice, Taiwan 101 Bond, had only 1,229 votes, and the third-most popular choice, an alternative Chinese translation of "Formosa Bond", garnered only 618 votes. [cite news|url=http://tw.stock.yahoo.com/news_content/url/d/a/061030/3/5wc1.html|publisher=Yahoo! Taiwan|date=2006-10-30|accessdate=2007-07-04|title=外幣計價國際債券將命名為「福爾摩莎債券Formosa Bond」(Foreign currency-denominated bonds to be called "Formosa bonds")] [cite magazine|url=http://nweb.otc.org.tw/otc16/news4.htm|title=國際債券有獎徵答暨票選命名活動 (Prizes for voters in international bond naming contest)|date=2006-09-25|accessdate=2007-07-04|journal=GreTai Securities Market Report|issue=15]

Trading

Bonds to be traded must have a credit rating of BBB or higher; they may not be issued in Chinese renminbi, the official currency of the People's Republic of China. Trading between securities firms has to be carried out through a subsystem of the GreTai Securities Market's Electronic Bond Trading System, for which trading hours are between 9:00 AM and 1:30 PM. However, Formosa bonds also listed on overseas exchanges may be traded over-the-counter between bond dealers.The first Formosa bonds were part of a US$250 million carried out by Deutsche Bank in November 2006; BNP Paribas followed with a Australian dollar issuance, initially planned at A$500 million (US$386 million at then-current exchange rates) for February 2007, but later reduced to A$308 million (US$258 million) and delayed until 10 April 2007. HSBC were also said to be considering issuing such a bond, and BNP Paribas suggested that they might regularly issue Formosa Bonds. [cite news|url=http://www.taipeitimes.com/News/biz/archives/2006/09/26/2003329292|date=2006-09-26|accessdate=2007-07-04|title=Deutsche Bank bonds are go|publisher=Taipei Times] [cite news|url=http://www.taipeitimes.com/News/biz/archives/2007/02/14/2003349006|date=2007-02-14|title=BNP Paribas gets green light|publisher=Taipei Times|accessdate=2007-07-04] Presently, only Taiwan branches of publicly-traded overseas financial institutions are permitted to issue Formosa Bonds; the market regulator has floated the idea of extending this permission to other branches and subsidiaries of such institutions as well. [cite news|url=http://www.taipeitimes.com/News/biz/archives/2007/03/23/2003353525|date=2007-03-23|accessdate=2007-07-04|publisher=Taipei Times|title=Formosa Bond could be opened to foreign issuers|last=Chung|first=Amber]

References


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