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June 24, 2017

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Bank of Taiwan may issue New Taipei treasury bonds

TAIPEI, Taiwan -- The Bank of Taiwan yesterday announced that it was granted the right to issue city treasury bonds (市庫券) on behalf of the New Taipei City Government.

As the first city in Taiwan that is getting ready to issue city treasury bonds, New Taipei will be issuing the bonds as early as August in order to relieve the city's budget shortage.

The Bank of Taiwan will be in charge of issuing, tendering and auctioning the bonds, as well as relevant registration procedures.

Currently, the city's annual expenditure exceeds its incoming revenue.

According to the city government, the said bonds will be available to brokers and used as diverse financing, also serving as a means to loan money from private investors.

Citizens and banks could choose to purchase either long-term or short-term bonds once the bonds are officially established by the New Taipei City Government. Citizens could profit from interest rates, while the New Taipei City Government could boost its financial resources.

The plan will enable Taiwan to expand its bond market, and will also boost the continuous growth of bond-related corporate banking; the city treasury bonds will create a win-win-win situation for the Bank of Taiwan, the New Taipei Government and the bond market, according to the bank.

The bank is planning to hold an information meeting on July 24 over the tendering of the bonds in order to carry out the issuing process smoothly in the future.

With the government treasury security (國庫券) as a reference, the issuing mechanism for the bonds will seek to distribute NT$10 billion to the private sector, said the New Taipei City Government earlier this month.

As opposed to applying for loans from banks, said a city government representative, the bonds have lower interest rates, aiding the improvement of the interest expenditures on the finances of the New Taipei City Government. Should the bonds be issued successfully, New Taipei City would be the first local government to distribute city treasury bonds.

In wishing to diversify its risk, the city government began planning the distribution of city treasury bonds in 2011, and has since completed the designs of the bonds' related legal mechanisms through amendments and approval from the Financial Supervisory Commission (金融監督管理委員會).

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