FSC to allow foreign banks to issue Taiwan dollar bonds

Taipei-The Financial Supervisory Commission (FSC) is planning to ease the rules on bond sales, allowing foreign bank branches in Taiwan to issue Taiwan dollar-denominated bonds in the local market, FSC Chairman Wellington Koo said Tuesday.

Speaking to reporters, Koo said this will pave the way for better funding for local companies that are focused on technology innovations.

Currently, foreign banks are allowed to sell only foreign currency-denominated bonds in Taiwan, and their bonds are traded on the international bond section of the local over-the-counter (OTC) market.

Allowing them to issue Taiwan dollar-denominated bonds will open up the sources of much needed mid- and long-term funding for innovative tech firms, as the banks will be seeking such investments, Koo said.

Local manufacturers have been eager to find funding for expansion and upgrades since the government initiated a "5 plus 2" innovation plan to upgrade local industries.

The "5 plus 2" innovation industry program refers to the Internet of Things, biotechnology, green energy, smart machinery, and defense, coupled with high-value agriculture and a circular economy.

Prior to the FSC's announcement of its plan to ease the rules on foreign banks' bond sale in Taiwan, it had adopted other liberalization methods, including the streamlining of the application process for banks and financial holding firms to invest in non-core businesses and allowing investment trust firms to set up private equity funds.

In addition, the FSC has also allowed the insurance sector to invest in the venture capital industry or directly in innovative firms.

As part of the effort to help innovative companies gain funding under the government's 5 plus 2 program, the FSC is also studying the feasibility of easing the rules on share listings on the local main board and the OTC market, Koo said.

In an attempt to boost the local renewable energy industry, the FSC has already allowed institutions in Taiwan and abroad to issue "green bonds" in Taiwan.

The green bond initiative, promoted by the local capital market, is aimed at showing corporate responsibility with regard to environmental protection, with the proceeds going toward environmentally friendly projects, the FSC said.

Since May 2017, a total of 11 green bonds with a value of NT$24.6 billion (US$834 million) have been listed on the OTC market, according to the FSC.

Source: Overseas Community Affairs Council