1、By Susan S. Chang,Development of the Taiwan Government Bond Market,Director General Department of National TreasuryMinistry of FinanceTaiwan, R.O.C,1,Contents, . Introduction . The Primary Market: issuing and outstanding amounts . The Structure of Primary Market . The Secondary MarketV. Policies and
2、 Measures. Future Outlook.Concluding Remarks,2, . Introduction,The Government bonds is a very important instrument to raise funds for government projects and expenditure. The government bond market also plays an key role in strengthening the financial sector. In this regard, many countries have try
3、very hard to develop a sound government bond market. The same is true for ROC government. In last ten years, the Taiwan government bond market grew very fast, and many policies and measures had been taken to improve the market.,3, . The primary market,1. Historical overviewThe first issuance of the
4、government bonds can be traced to 19494 kinds of bonds were issued Patriot bondShort-term Bond Annual BondConstruction Bond,4,Treasury Bonds Sold by the Central Government,5,Before 1975, a special law should be passed accompanying the annual budget bill to legalize the bond issuance.In 1975, A perma
5、nent law “The Statute for Issuing Central Government Construction Bonds” was promulgated in substitution for the annual law.,6,2. The status of government bonds Issuing amount,7,Outstanding (amount),8,Outstanding (as percentage of GDP),9,. The structure of primary market(June, 2000),1.Maturity,10,2.
6、 Coupon rates of issuing,11,3. Bidder of issuance Bidding qualification: authorized central government bond primary dealers The present authorized dealers include:Banks19SecuritiesFirms38Bills Financing Companies13Investment Trust Companies 3,12,4. Holder of government bondsAuthorized dealers 5060%B
7、anks3545%Securities firms1020% Bills Financing companies Investment trust companiesOthers4050%,13, . The Secondary Market,Before 1990, with good fiscal situation, issuance of government bonds had been very small. The transaction volume of stocks is more than that of government bonds.After 1990, in o
8、rder to fund many major infrastructure projects, the issuance of bonds increased sharply. This led to the thriving of the secondary market. From 1992, except 1994, the transaction volume of government bonds surpasses that of stocks.,14,Bonds & Stocks market trading volume,15,However, the major bond
9、transaction is on the repurchase basis, outright purchase transaction is few.,16,The trading system of the secondary market1.Organized exchangePlayers: securities dealers & brokersMatching method: computer biddingFee: 0.1%0.05% depending on trading volume Settlement: T+2,17,2.OTCPlayers: securities
10、dealers ,brokers and investorsTrading method: bargain directly with dealers, or through “Equivalent yield matching system” automatically matching.Fee: freeSettlement: T+3 or T+2,18,Yield Curve,19,Bond Trading,20,V. Policies and Measures,1. Improvement of issuing systemFrom allocation to competitive
11、biddingFrom price offer to interest rate offer2. Increase of variety of bondsIssuing longer-term bondsIssued first 10-year bond in Sep 22, 1993Issued first 15-year bond in Jun 16, 1995Issued first 20-year bond in Nov 24, 1998,21,Issuing zero-coupon bond Using Dutch bidding scheme to issue two trench
12、es of zero-coupon bond in Oct 20, 1995.3. Providing purchasing channel to minor investorsFrom Apr.1993, 2% of the issued amount is reserved for minor investors. Directorate General of Posts is commissioned to sell to minor investors, through 141 post offices.,22,4. Change to book-entry bondsIn Sep.
13、1997 first book-entry bonds was issued successfully, and a settlement bank system is used. Up to June 2000, NT$310 billion book-entry bonds have been issued. The settlement banks also increased from 7 to 14.Since Jan 15, 1999, The transformation of physical form bonds to book-entry ones has been ava
14、ilable. The settlement banks play the role as windows.,23,The percentage of book-entry to the total outstanding government bonds,24,4. Providing more issuing information Working toward regular issuance Making announcement on the bond issuing plan in quarter basis,25,5. To increase market liquiditySo
15、me surveys showed that A small amount of a single issuance always led to little transaction in the secondary market for that issuance.A new issuance with the same maturity as last one often results in low liquidity of the last issuance.,26,Measures takenTo set each issuance amount at about NT$30 bil
16、lion.To prevent issuing two continuous trenches of bonds with the same maturity.Introduction of reopening scheme is under consideration.,27,V. Future Outlook,1. To improve management of government debt2. To study the possibility of issuance on regular basis to reduce the negative impact of the irreg
17、ular issuance on the monetary market.,28,3. To make government bonds as a benchmark indicator. A task force was set up to discuss related issues and to work out possible solution.Issuing 30-year bond is under study to meet the needs of market and to help constructing yield curves with short, medium,
18、 and long-term interest rate.,29,4. To attract more participation of minor investorsTwo measures will be introduced next month:The information of government bonds will be available via internet and other media by the stock exchange.Minor investors can purchase new issuance and trade government bonds in the stock exchange, in addition to post offices.,30,演讲完毕，谢谢观看！,
