Taipei, May 8, 2008 (CENS)--To increase operating capital, some domestic banks, including Chang Hwa Bank, Hua Nan Commercial Bank, Taipei Fubon Commercial Bank, and Taiwan Business Bank, have lately floated subordinate bonds that mature in seven years, together worth a total of about NT$20 billion (US$625 million at US$1 = NT$32).

Insiders said that such eager floating of bonds by banks is partly due to great many bonds are due this year and partly because of possible risk in loan defaults to be seen by offshore banking units (OBUs), who have lent to Taiwanese small- and medium-sized enterprises in China.

In terms of bond ratings, most banks that issue such bonds gained above twA- except Bank of Panshin with twBBB-, according to Taiwan Ratings Corp. (TRC), a partner of Standard & Poor`s (S & P).

As for the interest rate on such seven-year-term subordinate bonds, Taipei Fubon Bank set a fixed rate of 3.09% per annum with floating value of NT$5 billion (US$156.2 million), while Chang Hwa and Hua Nan both set the corresponding rate at 3.1%, with floating value of NT$5 billion (US$156.2 million) and NT$3 billion (US$93.75 million), respectively. Taiwanese Business Bank adopted a flexible rate with issuing value of NT$5.2 billion (US$160.6 million).

(by Judy Li)