Overseas funds raised by Taiwanese firms hit record high in first 11 months

Taipei, Dec. 29, 2003 (CENS)--Overseas funds raised by Taiwanese enterprises in the first 11 months of this year amounted to NT$488.1 billion (US$14.36 billion at US$1 = NT$34), almost double last year's level. The figure is expected to break the NT$500 billion (US$14.71 billion) mark to hit a record annual high the full year.

The statistics recently released by the Central Bank of China (CBC) in Taiwan showed that from January to November the overseas funds raised by Taiwanese enterprises averaged at NT$44 billion (US$1.29 billion) per month, and the monthly amount was obviously expanding in second half of the year. In November alone, the value of such funds increased to NT$65.4 billion (US$1.924 billion), and the accumulated value is estimated at over NT$500 billion (US$14.71 billion) by the end of the year.

According to CBC, the overseas funds were raised by domestic companies mainly by issuing global depository receipts (GDRs) and exchangeable corporate bonds (ECBs). If including overseas syndicated loans, the amount of overseas funds raised should be much higher.

A financial official analyzed that there were three major reasons for Taiwan companies to resort to overseas capitals. The first one was low-interest rate offered by most international money markets, and ECBs floated in those markets were mostly subjective to 0% coupon rate, much lower than that of loans granted by banks in Taiwan. The second was the demand for foreign currencies by the electronics firms with overseas investments. And the third was a certain ratio of the funds raised overseas by domestic firms was allowed to be directly remitted to mainland China for investment there.

As a growing number of firms raised funds overseas, the loans granted by domestic banks to private enterprises posted a decline. In November, the ratio of indirect credits in the financial market fell to 69.58%, hitting a record low. A ranking official at CBC indicated that other than influencing domestic loan market, the overseas funds raised by local firms could sometimes affect the exchange rate of the New Taiwan dollar against foreign currencies once the funds were massively remitted back to the island. So, he suggested that domestic enterprises should carefully choose foreign currencies when they intend to raise overseas funds, and be wise enough to use foreign exchanges as a hedging tool against the possible influence on the forex market here.