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Exploring Regional Development in the Financial Sector of Taiwan

This research delves into the dynamics of Taiwan's financial industry, highlighting market liquidity, bond market maturity, investor behaviors, risk factors, and credit spreads. It discusses the challenges and opportunities for financial institutions in the post-financial crisis environment.

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Exploring Regional Development in the Financial Sector of Taiwan

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  1. 金融產業區域發展之探討 張華平 Hwa-Ping Chang March 21, 2011

  2. Market Development Highlights - I • High market liquidity and strong competition among banks limit the profitability of financial institutions. • Corporate bond market (outstanding amount: NT$1.38 trillion rated by TRC on Dec. 31, 2010) is still immature compared with the equity market (equity trading value NT$28.2 trillion on Dec. 31, 2010) • FI total issues outstanding rated by TRC (up to Dec.31, 2010): NT$560,549 million • Corp total issues outstanding rated by TRC (up to Dec. 31, 2010): NT$822,930 million • Lack of local investors to invest in bond issuances rated below ‘tw BBB+’ but willing to invest on offshore non-investment grade bonds. • Risk from high concentration of Financial Institutions as major investors in Bonds, CPs, and ECB. • Credit spreads on different tranches of ratings are still not significant although these have improved during and after the recent financial crisis. • Securitization market crashed after the financial crisis and the market is still waiting to recovery.

  3. Taiwan’s Straight Bond Market (Corp. Bond & Debentures)

  4. Issues with ‘tw’ ratings from Jan.1 to Dec.31, 2010 • Issue amount: NT$331,830 million FI: NT$157,130 million Corp: NT$174,700 million • Tranches: FI:56 Corp:37 • Companies: FI:24 Corp:11

  5. Market Status for Taiwan Ratings Corp. (TRC) (Up to Dec. 31, 2010)

  6. Market Development Highlights - II • High market liquidity and strong competition among banks limit the profitability of financial institutions. • Corporate bond market (outstanding amount: NT$1.38 trillion rated by TRC on Dec. 31, 2010) is still immature compared with the equity market (equity trading value NT$28.2 trillion on Dec. 31, 2010) • FI total issues outstanding rated by TRC (up to Dec.31, 2010): NT$560,549 million • Corp total issues outstanding rated by TRC (up to Dec. 31, 2010): NT$822,930 million • Lack of local investors to invest in bond issuances rated below ‘tw BBB+’ but willing to invest on offshore non-investment grade bonds. • Risk from high concentration of Financial Institutions as major investors in Bonds, CPs, and ECB. • Credit spreads on different tranches of ratings are still not significant although these have improved during and after the recent financial crisis. • Securitization market crashed after the financial crisis and the market is still waiting to recovery.

  7. Distribution of Publicly Offered Corp. Bond and Bank Debentures

  8. Recent Corporate Bond Issuance Rated By TRC

  9. Market Development Highlights - III • High market liquidity and strong competition among banks limit the profitability of financial institutions. • Corporate bond market (outstanding amount: NT$1.38 trillion rated by TRC on Dec. 31, 2010) is still immature compared with the equity market (equity trading value NT$28.2 trillion on Dec. 31, 2010) • FI total issues outstanding rated by TRC (up to Dec.31, 2010): NT$560,549 million • Corp total issues outstanding rated by TRC (up to Dec. 31, 2010): NT$822,930 million • Lack of local investors to invest in bond issuances rated below ‘tw BBB+’ but willing to invest on offshore non-investment grade bonds. • Risk from high concentration of Financial Institutions as major investors in Bonds, CPs, and ECB. • Credit spreads on different tranches of ratings are still not significant although these have improved during and after the recent financial crisis. • Securitization market crashed after the financial crisis and the market is still waiting to recovery.

  10. Credit Spread of Corporate Bonds Over Government Bonds

  11. Market Development Highlights - IV • High market liquidity and strong competition among banks limit the profitability of financial institutions. • Corporate bond market (outstanding amount: NT$1.38 trillion rated by TRC on Dec. 31, 2010) is still immature compared with the equity market (equity trading value NT$28.2 trillion on Dec. 31, 2010) • FI total issues outstanding rated by TRC (up to Dec.31, 2010): NT$560,549 million • Corp total issues outstanding rated by TRC (up to Dec. 31, 2010): NT$822,930 million • Lack of local investors to invest in bond issuances rated below ‘tw BBB+’ but willing to invest on offshore non-investment grade bonds. • Risk from high concentration of Financial Institutions as major investors in Bonds, CPs, and ECB. • Credit spreads on different tranches of ratings are still not significant although these have improved during and after the recent financial crisis. • Securitization market crashed after the financial crisis and the market is still waiting to recovery.

  12. Discussion and Q&A

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