 Following the passage of the Financial Asset and Real Estate Securitization Ordinance in June and July of 2002 respectively by Legislative Yuan, IBT received the first approval from the Ministry of Finance to launch asset-backed securitization products in Taiwan and got the nations’ nascent ABS market off the ground.
The First Asset Securitization
On 24th of February 2003, the Industrial Bank of Taiwan completed Taiwan’s first-ever collateralized loan obligations (CLOs). The CLOs were sold out soon after their debut and widely recognized as the best securitization case by Euromoney, Finance Asia, Asia Money and the Asset.
The First Real Estate Securitization
Moreover, IBT planned the IBM Tower Real Estate Securitization Project for Chia Shin International, and listed over the counter on the 11th of June 2004 as the pioneer of real estate securitization in Taiwan. As a result, NT $4.41 billion of asset-backed securities was issued over seven years against the IBM Tower, property owned by Chia Shin International with a notional amount of NT $ 1 million. The most senior tranche was publicly issued for NT$ 2.13 billion, allowing Taiwan to march into the era of real estate securitization.
The First Trade Receivables Securitization
On the 12th of November 2004, IBT further launched the “World Peace Industrial Co., Ltd. Trade Receivables Commercial Paper”, the first issuance of trade receivables securitization producs in Taiwan. The case was structured as a revolving security. Within four years after inception, the trust agency will use the collected fund to purchase new receivables from the World Peace Industrial Co., Ltd. every two month until the commencement of principal repayments. During the five-year securitization period, short-term commercial papers will be issued every thirty days subject to a NT$ 2.5 billion cap. Trade Receivables Securitization offers multiple set of benefits and is poised to become a major corporate fundraising tool going forward.
The Management Agency for the First Synthetic Collateralized Debt Obligation (Synthetic CDO)
IBT has an optimistic view on the Synthetic Collateralized Debt Obligation (Synthetic CDO) market. Therefore, after going through a series of lengthy negotiations of regulatory authorities, IBT became the first financial institution in Taiwan to obtain the license as a financial advisor for Synthetic CDO products. IBT subsequently partnered with JP Morgan and issued a US$ 40 million Synthetic CDO on the 19th of November 2004. Since the bonds offer higher yield than that of other comparable fixed-income securities with Standard & Poor A-rating, they became increasingly popular in the market. Going forward, IBT will build on its expertise in securitization to develop new types of securitization products.
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