Taiwan could be the next go-to place for US dollar funding for bond issuers, after authorities loosened regulations on debt issuance.
The government expanded from this month the roster of issuers that can sell Formosa bonds without prior approval, to all units of lenders listed on bourses belonging to the World Federation of Exchanges — an association that represents 64 exchanges, including the NASDAQ and Euronext.
Sales of such notes were previously limited to banks on 14 overseas exchanges.
Market participants expect that the relaxation in rules would help revitalize the nation’s debt market.
Issuance of corporate debt sold in Taiwan but denominated in a foreign currency slowed last year, with US dollar-denominated Formosa note sales declining to US$40 billion from US$48 billion in 2016, Bloomberg-compiled data showed.
About 99 percent of Formosa bonds sold last year were denominated in the US currency, the data showed.
The US$40 billion in sales last year compared with a record US$322 billion of all US dollar notes issued by Asian institutions outside of Japan during the period.
Qatar National Bank QPSC and Abu Dhabi Commercial Bank last week issued US dollar bonds in Taiwan.
South Korea’s Woori Bank priced US$300 million of five-year Formosa notes at 87 basis points over the three-month London interbank offered rate.
The lender said it got US$900 million of orders from 55 investors for the offering.
South Korea’s biggest issuer, the Export-Import Bank of Korea, is interested in returning to Formosa bonds, while KB Kookmin Bank has also been closely monitoring market conditions and is ready to tap the cash-rich investor base in Taiwan, companies said.
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