Deutsche strip bond starts Taiwan fund cleanup

The regulators indicate asset securitization is also in the works.

Deutsche Bank has completed Taiwan's first strip bond transaction in a move designed to avoid a potential crisis in the country's bond fund industry. Yesterday February 3 the investment bank stripped NT$2.6 billion $82 million worth of principal obligations PO in structured bond funds away from the interest obligations IO, allowing it to sell back the PO in the form of zero-coupon bonds to the counterparty, a domestic securities investment trust company.

Although Deutsche would not comment on the counterparty, it is believed to be Fubon Securities Investment Trust. Neither party would discuss the size of the premium being paid to the bank for issuing strip bonds, which will...

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