Chin Hsin planning Taiwan's 1st CMBS sale by year's end

Tong Yang Chia Hsin Interna-tional Corp (嘉新國際), an affiliate of Chia Hsin Cement Corp (嘉新水泥), plans to sell a commercial property-backed bond worth as much as NT$2.5 billion (US$73 million) by the end of the year to refinance loans.

Societe Generale and Industrial Bank of Taiwan (台灣工銀) will manage the sale of what would be the nation's first commercial mortgage-backed security, or CMBS, since legislators last month allowed the securitization of real estate, Industrial Bank chairman Kenneth Lo (駱錦明) told reporters in Taipei.

Between NT$2 billion and NT$2.5 billion of seven-year bonds will be offered to the public. The bond will be backed by the commercial mortgage on an office building in downtown Taipei where the tenants include International Business Machines Corp, ABN Amro Holding NV and J.P. Morgan Chase & Co.

This first mandate "will pave the way for future similar transactions," said Pascal Sefrin, SG's chief in Taiwan.

The new law "sets the legal framework for securitization, to help provide low-cost liquidity to property owners as well as diversification and higher returns to investors," Sefrin said.

Details of the sale are being worked out among Chia Hsin and the managers.

"The interest rate should be better than the bank deposit rate," Lo said, adding that investors may benefit from a lower investment income tax of 6 percent on the bond that's separate from the per-sonal or corporate income tax.

Industrial Bank of Taiwan in February completed the coun-try's first sale of collateralized loan obligation, a bond backed by corporate credits