Taipei, Nov. 21, 2011 (CENS)--With the issuance of renbimbi-denominated bonds in Hong Kong having become a new fund-raising channel for domestic enterprises, the Financial Supervisory Council (FSC) will coordinate the Central Bank of China (CBC) allowing domestic enterprises to float such bonds directly, instead of via offshore companies in a third place.

Many Taiwanese listed companies and major enterprises plan to issue such bonds, known as dimsum bonds, directly and are inquiring the regulator about the feasibility of the plan.

An FSC official noted that the existing law and regulation don’t forbid domestic enterprises to issue dimsum bonds in Hong Kong but overseas fund raising by listed companies needs the approval of the CBC.

Chou A-ting, deputy CBC, reported yesterday (Nov. 20) that the plan needs the agreement of People’s Bank of China to sign cross-Taiwan Strait currency clearance mechanism.

Dimsum bonds have become a major fund-raising channel for Taiwanese-invested companies. So far this year, six Taiwanese-invested enterprises have floated dimsum bonds including Asian Cement, ASE Inc., Solargiga, New Focus Auto Tech, TPV Technology, and Yuen Foong Yu Paper. The bonds, however, have been floated by their overseas affiliates, rather than by those enterprises themselves.

Issuance of dimsum bonds by domestic enterprises has the trend of expanded scale and declining interest rates recently. ASE, for instance, has floated 650 million yuan of dimsum bonds and Asia China has issued 600 million yuan, both with interest rates below 3% per annum.

A number of Taiwanese listed enterprises have planned to float dimsum bonds by the parent firms directly, due to the consideration of the scale of fund raising, interest rate, and cost. With strong credit standing, parent firms can enjoy better terms in floating dimsum bonds.
 

Source:news.cens.com