First Issue of IP Credit-Backed Securities to Launch Next Year.

The first issue of IP credit-backed securities is expected to launch next year.  Small And Medium Enterprise Administration, MOEA indicated yesterday (07/24/05) that it and the Financial Supervisory Commission, Executive Yuan have agreed to join hands to develop an exemplar issue of corporate IP credit-backed securities.  The SME Administration also indicated that a plan would be developed in respect of utilizing credit guaranty fund to back high-risk IPs to reduce the trusteee’s risk in operating IP credit financing and the investor’s risk in making the relevant investments.  Industrial Bank of Taiwan and a Japanese bank are competing to lead the first-ever issuance of IP credit-backed securities in Taiwan.

 

Endorsed by the various government resources, the market of this new security product is estimated to value at least 10 billion New Taiwan Dollars.

 

According to an SME Administration officer, for the past years, the government has committed itself to helping businesses collateralize their IP assets for obtaining credit and commercialize the fruit of their R&D efforts.  However, due to the lack of an exit mechanism, most banks still choose to stay away from IP-backed financing despite the various incentives the government has to offer.

 

The SME Administration and the Financial Supervisory Commission will coordinate a financial institution to allocate NTD2~5 billion as the special fund for IP-backed financing, which will also be the originator of the first issue of corporate IP credit-backed securities in Taiwan.  In addition, the credit guaranty fund will appropriate a sum of NTD2 billion from the current line of tranche guaranty to provide 100% endorsement of high-risk IP.  (2005.7)

CYJ/EMA