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FSC approves Hsinchu International's euro-bond offer backed by housing loans

The Financial Supervisory Commission (FSC) yesterday gave its approval to the Hsinchu International Bank's (新竹商銀) request to issue its first securitization product backed by housing loans, for what will be Taiwan's first euro-denominated overseas bonds.

"The issuance is an ideal pattern for the development of the nation's financial asset securitization," the commission spokesman Lin Chung-cheng (林忠正) said at a press conference yesterday.

Hsinchu International will use Deutsche Bank to issue the NT$14.25 billion (US$424.6 million) worth of Asset Backed Commercial Paper (ABCP), which will be listed and traded in Ireland, the commission said.

The French Caylon Bank Taiwan branch will underwrite NT$11.4 to NT$12.1 billion worth of the bonds and sell to European and Asian institutional investors, while Hsinchu International will keep NT$2.1 billion to NT$2.8 billion worth to strengthen its credit.

The offer will be the largest securitization of housing loans ever in this country.

The bonds will mature in four to seven years after issuance. They are expected to help the bank get cash and attract potential foreign investors, the commission said.

Hsinchu International's ABCP is the nation's third overseas issuance of securitization products, followed by Cosmos Bank's (萬泰銀行) issuance of cash-advance card loans backed securitization product worth NT$11.56 billion in 2003 and Jih Sun International Bank's (日盛國際商銀) auto loans backed securitization bills worth NT$5 billion last year.

The passage of the Financial Asset Securitization Law (金融資產證券化條例) in 2002 and the Real Estate Securitization Statute (不動產證券化條例) in 2003 established a framework to help provide low-cost liquidity to asset owners, as well as diversification and higher returns to investors. The financial regulator has approved 37 issuances of securitization products totaling NT$269.78 billion since 2003, the commission said.
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