Industrial Bank of Taiwan, with over TWD51 billion (USD1.46 billion) in assets, is looking to structure the first domestic synthetic collateralized debt obligation in Taiwan to remove credit risk from its balance sheet. "We want to be the first investment bank in Taiwan to do this as it will demonstrate that we have the capabilities to introduce new products," said Eric Lin, head of structured finance in Taipei. IBT is speaking with two European firms about structuring a CDO of over USD100 million and it could hit the market by the second quarter of next year, according to Lin.
"This is more about building our reputation than the financials," said Lin. He explained the transaction makes financial sense, but is also designed to put the firm on the map as a competent structurer.
IBT is currently finalizing a TWD1 billion collateralized loan obligation--the first for the market--with Société Générale. Lin said the bank will choose structuring counterparties based on their willingness to teach IBT about the structuring process and help establish systems. "We're looking for a bank that will transfer knowledge to us, not just close the deal. We want to learn how to structure these," said Lin. IBT wants to eventually arrange CDOs for its clients.
"IBT's CDO will be a test deal for this market," said a treasurer at an international bank, noting that this will show if local investors and banks are interested in this type of product.
