Deutsche Bank Wins Permission to Issue Foreign-currency Bonds

        Deutsche Bank has been so impressed by the low cost, simple procedures, and other advantages of raising funds in Taiwan that it applied to the Financial Supervisory Commission (FSC), under the provisions of Article 5 of the Criteria Governing the Offering and Issuance of Securities by Foreign Securities Issuers, to issue common corporate bonds denominated in foreign currencies on the island. The case became effective on Oct. 3, making this the first issuance of international bonds in Taiwan.

The FSC notes that the issuance of foreign-currency corporate bonds by Deutsche Bank will be in the range of US$200 to US$500 million, that the bonds have a face value of US$10,000, and that their term is three years at a fixed interest rate that is expected to be 4.6% to 5%. The actual rate and base date will be determined by the trend in international interest rates, and will be listed on the over-the-counter market for trading once the offering is complete.

The FSC believes that the Deutsche Bank case will encourage more international financial institutions to follow suit, and that the total value of issuance from 2007 through 2009 will reach NT$100 billion. The FSC promises to continue simplifying the procedures for the issuance of international bonds in Taiwan so as to attract more companies to raise funds on the island.

Other related agencies are also continuing to relax restrictions in order to encourage foreign companies to issue foreign-currency-denominated bonds in Taiwan. The Ministry of Economic Affairs has agreed that Article 20-1 of the Statute for Upgrading Industries will apply to foreigners who offer and issue corporate bonds publicly in Taiwan, thus exempting them from the securities transaction tax. The Taxation Agency of the Ministry of Finance has also agreed that investors who buy foreign-currency bonds issued by foreign companies in Taiwan will be exempt from income taxes on interest earned from such investment, since it will be considered offshore income.

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