Regulator mulls options for Formosa market

The sale of foreign-currency bonds with short-dated call options has been outlawed in Taiwan. Other options line up to satisfy investors hunting yield.

A regulatory clampdown on Formosa bonds with short-dated call options has hit issuance volume, but market participants are hopeful new products will satisfy ongoing demand for higher yielding investments than are currently on offer in Taiwan’s local currency bond market.

Taiwan’s Financial Supervisory Commission FSC banned Formosa bonds with call options of less than five years in late May. The decision had an immediate impact on international issuers since they had largely been attracted to the market in the first place due to the cost savings such bonds offered.

However, demand for higher-yielding instruments has not gone away, but only...

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