Formosa bond

Formosa bond
Traditional Chinese	福爾摩莎債券
Simplified Chinese	福尔摩莎债券
Transcriptions Standard Mandarin Hanyu Pinyin Fú'ěrmóshā Zhàiquàn Wade–Giles Fu²-êrh³-mo²-sha¹ Chai⁴-ch′üan⁴ Hakka Pha̍k-fa-sṳ Fuk-ngì-mô-sâ Chai-khién Southern Min Hokkien POJ Hok-ní-mô͘-sá Chè-kǹg Tâi-lô Hok-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

• Foreign currency denominated bond
• Eurobond

References

1. "Taiwan Foreign-Denominated Bond Market Q&A" (PDF). GreTai Securities Market. Retrieved 2007-07-04.
2. 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.