The first Taiwanese offshore primary collateralised bond obligation (CBO), worth nearly $170 million, is expected to price in the week of March 17 and close on March 21, sources familiar with the transaction said today.TMBF One, the issuer, is a special-purpose vehicle registered in the Cayman Islands created for the purpose for the primary CBO, and co-sponsored and co-arranged by Taiwan’s International Commercial Bank of China (ICBC), Hong Kong-based investment manager ADM Securities, Hong Kong-based independent investment banking firm Asian Capital Partners and Taiwanese research house Insight Pacific.
As part of the transaction, 17 to 19 small to medium-sized Taiwanese firms from a large range of industries, from semiconductor designers to construction material suppliers, will issue US dollar-denominated convertible bonds. At the same time, TMBF will issue three classes of notes due in 2006 backed by the convertible bonds. Insight Pacific was responsible for researching and evaluating the companies.
The driving force behind the transaction was the convergence of investor interest in Taiwan’s small cap companies, and a desire of Taiwan’s government and main financial institutions to support small and medium-sized companies,” said Andrew Korner, Hong Kong-based chief executive of Asian Capital Partners.
Class A, with an expected size of $133 million, has received a prospective A rating by Standard & Poor’s. The class A notes are floating-rate notes guaranteed by ICBC, which has an 'A' foreign currency rating. French bank Credit Lyonnais is co-arranger and underwriter for the Class A notes.
The class B senior preference shares are expected to be worth about $16 million and the class C junior preference shares are expected to be worth between $18 million and $20 million.
Several bankers have previously said Taiwan’s withholding tax, at 6%, is still a constraint for cross-border securitisation transactions. But TMBF One’s deal is not subject to withholding tax on cross-border deals because the SPV is an offshore entity, said an official at another one of the arrangers.
According to another source familiar with the deal, TMBF One “will be the first of several because the government has committed to allocations of $1.5 billion for the (small cap) sector". "In Taiwan, we definitely will do two (primary CBOs) this year. Possibly three,” the official added.
More on Structured Products
Chris Leone and Dushyant Chadha replace Paul Galietto
Steffen Scheuble says growth in mainstream strategies may be nearing saturation point
Capital-at-risk product pays out early if crude index is no lower than strike price in 30 months’ time
Investors’ capital at risk if underlying is below barrier level at maturity
Sign up for Risk.net email alerts
Sponsored video: MarketAxess
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.