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
ECB rate cut to drive modest recovery in eurozone
Correlation sensitivity in multi-asset structured products explained
UK investors offered autocallable in conservative or bullish versions
Schlumberger product puts capital at risk if American barrier is breached
Sign up for Risk.net email alerts
Nominated for two technology awards
Nominated for post trade technology award
Sponsored webinar: Collateral and counterparty tracking
Isda directors warn on fragmentation, access and liquidity - but expect problems to pass
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.