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 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.[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 . "Taiwan Foreign-Denominated Bond Market Q&A" (PDF). . GreTai Securities Market Retrieved on 2007-07-04.
  2. ^ a b Chung, Amber. "BNP Paribas mulls second bond issue on offshore market", Taipei Times, 2007-04-19. Retrieved on 2007-07-04. 
  3. ^ Yang, Ling-wen. "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, 2006-09-11. Retrieved on 2007-07-04. 
  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. Retrieved on 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)" (2006-09-25). GreTai Securities Market Report (15). 
  6. ^ "Deutsche Bank bonds are go", Taipei Times, 2006-09-26. Retrieved on 2007-07-04. 
  7. ^ "BNP Paribas gets green light", Taipei Times, 2007-02-14. Retrieved on 2007-07-04. 
  8. ^ Chung, Amber. "Formosa Bond could be opened to foreign issuers", Taipei Times, 2007-03-23. Retrieved on 2007-07-04.