US banks including Goldman Sachs Group Inc and Citigroup Inc are rushing to issue US dollar bonds in Taiwan after a rule change unlocked US$586 billion of funds held by local insurance companies.
Goldman sold US$974 million of 30-year notes last month in the largest such issuance in Taiwan, leading US$7.3 billion in greenback debt offers this year, versus zero a year earlier.
JPMorgan Securities LLC estimates US issuers can obtain lower costs than they would at home, after lawmakers in May excluded locally issued foreign-currency bonds from a 45 percent cap on the amount insurance firms can invest in overseas assets.
“With Taiwan’s very low benchmark-rate environment, a lot of domestic-currency investments have low yields,” said Godwin Chang (張建西), Taiwan head at Societe Generale AG, which sold US$1.21 billion of bonds in Taiwan this year. “Life insurers are better off having more foreign-currency investments.”
The central bank cut its policy rate to a record low 1.25 percent in 2009 and has maintained it at 1.875 percent over the past 13 quarters.
Last week, Goldman issued its zero-coupon, 30-year bonds at a price-to-yield ratio of 4.96 percent. Morgan Stanley’s notes due 2044 paid a coupon of 4.7 percent and Citigroup’s similar-maturity, zero-coupon debt was sold at 4.88 percent.
All of the US dollar notes sold in Taiwan since May’s amendment are callable by the issuer and mature in 20 or 30 years, while 74 percent pay zero coupon, according to data compiled by Bloomberg. Foreign-currency notes issued in Taiwan are called Formosa bonds.
Callable notes are popular among insurers, which can demand higher yields to boost returns, JPMorgan said in a note on Aug. 22.
For insurers whose investments abroad have not yet neared the 45 percent limit, the locally issued foreign-currency bonds are not the most attractive.
Cathay Life Insurance Co (國泰人壽), the largest in the industry with NT$4.3 trillion of assets, has bought very few of the foreign-currency notes as they offer rates lower than similar securities overseas.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) secured a record 70.2 percent share of the global foundry business in the second quarter, up from 67.6 percent the previous quarter, and continued widening its lead over second-placed Samsung Electronics Co, TrendForce Corp (集邦科技) said on Monday. TSMC posted US$30.24 billion in sales in the April-to-June period, up 18.5 percent from the previous quarter, driven by major smartphone customers entering their ramp-up cycle and robust demand for artificial intelligence chips, laptops and PCs, which boosted wafer shipments and average selling prices, TrendForce said in a report. Samsung’s sales also grew in the second quarter, up
LIMITED IMPACT: Investor confidence was likely sustained by its relatively small exposure to the Chinese market, as only less advanced chips are made in Nanjing Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) saw its stock price close steady yesterday in a sign that the loss of the validated end user (VEU) status for its Nanjing, China, fab should have a mild impact on the world’s biggest contract chipmaker financially and technologically. Media reports about the waiver loss sent TSMC down 1.29 percent during the early trading session yesterday, but the stock soon regained strength and ended at NT$1,160, unchanged from Tuesday. Investors’ confidence in TSMC was likely built on its relatively small exposure to the Chinese market, as Chinese customers contributed about 9 percent to TSMC’s revenue last
Taiwan and Japan will kick off a series of cross border listings of exchange-traded funds (ETFs) this month, a milestone for the internationalization of the local ETF market, the Taiwan Stock Exchange (TWSE) said Wednesday. In a statement, the TWSE said the cross border ETF listings between Taiwan and Japan are expected to boost the local capital market’s visibility internationally and serve as a key for Taiwan becoming an asset management hub in the region. An ETF, a pooled investment security that is traded like an individual stock, can be tracked from the price of a single stock to a large and
Despite global geopolitical uncertainties and macroeconomic volatility, DBS Bank Taiwan (星展台灣) yesterday reported that its first-half revenue rose 10 percent year-on-year to a record NT$16.5 billion (US$537.8 million), while net profit surged 65 percent to an unprecedented NT$4.4 billion. The nation’s largest foreign bank made the announcement on the second anniversary of its integration with Citibank Taiwan Ltd’s (花旗台灣) consumer banking business. “Taiwan is a key market for DBS. Over the years, we have consistently demonstrated our commitment to deepening our presence in Taiwan, not only via continued investment to support franchise growth, but also through a series of bolt-on acquisitions,” DBS
RSS