GDR becomes a favorite fund-raising instrument.
Two tech firms Gintech Energy Corporation and Wistron Optoelectronics have successfully issued GDR, at scales of US$53 million and US$224 million, respectively, so far this year, breaking the frozen state of Taiwan's GDR market since the outbreak of global financial tsunami last year. Wistron even managed to cut the discount rate for its GDRs to only 2%, compared with typical 10% for GDRs issued by tech firms in the past or maximum legal cap of 20%, giving the market sentiment a strong boost.
A number of domestic enterprises have also announced GDR issuance plans, including a US$300 million plan of Tatung, US$215 million of Prime View International, US$200 million of Farglory Group., and NT$10 billion of KGI Securities, which, plus the previous two cases, add to over US$1 billion.
Some others are mapping out their GDR plans including Shin Kong Financial Holding with a US$500 million plan, Inotera Memories with US$400 million plan, Fubon Financial Holding, and Chinatrsut Financial Holding.
Investment bankers forecast that GDR issuance could peak in the fourth quarter this year, noting that one special feature of the GDR market this year is the participation of many conventional industry firms and financial firms, breaking the dominance by tech firms in the past.
Banking managers pointed out that GDR issuance enables domestic enterprises to raise foreign currency-denominated funds directly, at lower cost and exchange rate risk, so as to meet their foreign-currency obligations.
In addition, GDR issuance can be a prelude to the solicitation of foreign capital, notably Chinese capital, as the issuing companies can issue new shares for GDR buyers to convert their GDRs into stocks directly upon the maturity of GDRs.
On the other hand, the strong upturn of the local stock market has considerably enhanced the interest of foreign investors in GDRs issued by Taiwanese enterprises, due to the increased value of stocks used as collateral for GDR issuance.
|Printer friendly Cite/link Email Feedback|
|Title Annotation:||global depository receipts|
|Publication:||The Taiwan Economic News|
|Date:||Jun 22, 2009|
|Previous Article:||MSI lands LG's contract orders for CULV-based NB PCs.|
|Next Article:||Draft guidelines for structured-note business criticized as too strict.|