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ABCP Demand Heats Up In Taiwan

24 Aug 2006

Taiwanese investors that have just got into structured bonds incorporating global collateralized debt obligations are now starting to look at shorter-dated asset-backed commercial paper.

Taiwanese investors that have just got into structured bonds incorporating global collateralized debt obligations are now starting to look at shorter-dated asset-backed commercial paper.

"Issuance for ABCP is overtaking longer-tenor CBO deals," said Jackie Lee, structured credit analyst atFitch Ratings in Taipei. Repackaged structured bonds incorporating U.S. dollar-denominated static synthetic CDOs and domestic structured interest-rate notes have proved popular since regulators pushed local bond funds to dispose of their structured note holdings (DW, 3/18/05). ABCP is attracting short-term deposit money, given its higher yields compared with longer-dated structured bonds.

Using the same special-purpose vehicle, new ABCP is rolled out to redeem maturing paper throughout the life of the underlying synthetic CDO, which is typically a five-to-seven year deal.

Fitch expects the trend for ABCP transactions to remain hot until at least the end of the year. "We're seeing a lot of transactions in the pipeline," added Lee.

24 Aug 2006