Deutsche strip bond starts Taiwan fund cleanup

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.