Twenty-five banks -- led by Chiao Tung Bank (
The amount is a part of a larger NT$323.3 billion syndicated loan -- by some accounts, the world's largest ever -- in which NT$240 billion in loans will come from government deposits at the 25 banks. Lending terms for the remaining NT$15 billion have yet to be decided.
"The high-speed railway is the biggest private investment project in Taiwan," said Liang Cheng-jin (
For the banks' portion of the loan package, the interest rate has been set between 8.085 percent, or the average of prime lending rates for Bank of Taiwan and ICBC, plus 0.6 percent. The banks' loans will last 20 years, and there will be a six-year grace period in which no payments are due.
For the government's portion, the interest rate has a set range between 6.3515 percent and 6.8 percent.
Lin Fong-cheng (
Nita Ing (殷琪), chair of the THSRC, said the government's backing was important in leveraging the assistance of the 25 bank lenders.
"The government's support and the three leading banks' effort in the process of financing the high-speed railway project is highly appreciated," Ing said.
Since September 1998, the THSRC and the three leading banks had been working on the financing project, trying to find a way to minimize possible financial risk to the private lenders.
A Chiao Tung executive, who asked not to be identified, said that the banks' loans would be given dollar-for-dollar protection by the government. Should THSRC fail, the government would take over the project, which is estimated to have NT$455.3 billion in equity.
According to Jessica Wu (吳怡君), senior vice president of Global Financial Services, a firm that provides financial analysis for THSRC, the corporation also plans to raise NT$132 billion in addition to yesterday's announced loan package.
"Currently, THSRC has raised NT$20 billion," Wu said. "We expect to raise another NT$10 billion by the end of June."
Chu Yu-chun (
"The demand is diverted over the years to come," Chu said. "This year, the estimated demand is roughly only NT$5 billion."
Furthermore, public construction projects such as the high-speed rail face possible delays and, therefore, the impact on the financial market is prolonged, Chu said.
Taiwan's high-speed railway project is its first Build-Operate-Transfer (BOT) project and is slated to begin operating in 2005.
"Eleven land construction bids should be finished by April," said T.C. Kao (