Formosa bond

Formosa bond
Traditional Chinese福爾摩莎債券
Simplified Chinese福尔摩莎债券
Transcriptions
Standard Mandarin
Hanyu PinyinFú'ěrmóshā Zhàiquàn
Wade–GilesFu²-êrh³-mo²-sha¹ Chai⁴-ch′üan⁴
Hakka
Pha̍k-fa-sṳFuk-ngì-mô-sâ Chai-khién
Southern Min
Hokkien POJHok-ní-mô͘-sá Chè-kǹg
Tâi-lôHok-ní-môo-sá Tsè-kǹg

A Formosa bond (Chinese: 福爾摩莎債券; Pe̍h-ōe-jī: Hok-ní-mô͘-sá Chè-kǹg) is a bond issued in Taiwan but denominated in a currency other than the New Taiwan Dollar.[1] They are issued by the Taiwan branches of publicly traded overseas financial institutions and to be traded must have a credit rating of BBB or higher.

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 (FSC).[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]

Trading

Bonds to be traded must have a credit rating of BBB or higher. 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]

See also

References

  1. ^ a b c "Taiwan Foreign-Denominated Bond Market Q&A" (PDF). GreTai Securities Market. Retrieved 2007-07-04.
  2. ^ a b Chung, Amber (2007-04-19). "BNP Paribas mulls second bond issue on offshore market". Taipei Times. 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. Archived from the original on 2012-07-16. Retrieved 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 2007-07-04.[permanent dead link‍]
  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. No. 15. 2006-09-25. Retrieved 2007-07-04.
  6. ^ "Deutsche Bank bonds are go". Taipei Times. 2006-09-26. Retrieved 2007-07-04.
  7. ^ "BNP Paribas gets green light". Taipei Times. 2007-02-14. Retrieved 2007-07-04.
  8. ^ Chung, Amber (2007-03-23). "Formosa Bond could be opened to foreign issuers". Taipei Times. Retrieved 2007-07-04.