Formosa bond

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Formosa bond
Traditional Chinese 福爾摩莎債券
Simplified Chinese 福尔摩莎债券
Hanyu Pinyin Fú'ĕrmósuō Zhàiquàn

A Formosa bond is a non-New Taiwan Dollar-denominated bond issued in Taiwan by a foreign institution.[1]

[edit] 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.[2] 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.[3] 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.[4][5]

[edit] 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.[1] The first Formosa bonds were part of a US$250 million carried out by Deutsche Bank in November 2006; BNP Paribas followed with an 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.[2][6][7] 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.[1][8]

[edit] References

  1. ^ a b c (PDF) Taiwan Foreign-Denominated Bond Market Q&A. GreTai Securities Market. http://www.otc.org.tw/storage/bond_download/international_bond/Q&A.pdf. Retrieved 2007-07-04. 
  2. ^ a b Chung, Amber (2007-04-19). "BNP Paribas mulls second bond issue on offshore market". Taipei Times. http://www.taipeitimes.com/News/biz/archives/2007/04/19/2003357355. Retrieved 2007-07-04. 
  3. ^ Yang, Ling-wen (2006-09-11). "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)". Eastern Television. http://news.yam.com/ettoday/fn/200609/20060911304090.html. Retrieved 2007-07-04. [dead link]
  4. ^ "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")". Yahoo! Taiwan. 2006-10-30. http://tw.stock.yahoo.com/news_content/url/d/a/061030/3/5wc1.html. Retrieved 2007-07-04. 
  5. ^ "國際債券有獎徵答暨票選命名活動 (Prizes for voters in international bond naming contest)". GreTai Securities Market Report (15). 2006-09-25. http://nweb.otc.org.tw/otc16/news4.htm. Retrieved 2007-07-04. 
  6. ^ "Deutsche Bank bonds are go". Taipei Times. 2006-09-26. http://www.taipeitimes.com/News/biz/archives/2006/09/26/2003329292. Retrieved 2007-07-04. 
  7. ^ "BNP Paribas gets green light". Taipei Times. 2007-02-14. http://www.taipeitimes.com/News/biz/archives/2007/02/14/2003349006. Retrieved 2007-07-04. 
  8. ^ Chung, Amber (2007-03-23). "Formosa Bond could be opened to foreign issuers". Taipei Times. http://www.taipeitimes.com/News/biz/archives/2007/03/23/2003353525. Retrieved 2007-07-04. 
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