The market for Formosa bonds has been a....>

US SWAPS: The market for Formosa bonds has been a strong influence on implied

volatility in the dollar market for many years. Strategists at Goldmans write

about the decline of such issuance

- "Early last year, the FSC signaled that they were considering revising the

rule on callable periods. Under the new rule, Formosa bonds will not be callable

till five years after the issuance in the primary market and those traded in the

secondary market will be non-callable for at least three years (there were no

limits previously). This led to significant increase in issuance in the first

quarter of 2017 in order to avoid the non-call restrictions, hitting a record

high of $7.9bn in March 2017. With an official amendment on June 24, 2017, the

issuance has declined sharply since then to less than $2bn in each month of Q4.

One of main concerns of regulators were reinvestment risks and associated drops

in yields when bonds are called."