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STRUCTURED PRODUCTS | Cesar Tordesillas, Taiwan
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Taiwanese transactions unaffected by withholding tax

The two Taiwanese cross-border residential mortgage-backed securities transactions are not immediately affected by the announced change in Taiwan's withholding tax legislation.

On 28 October 2009, the government announced an amendment on the withholding tax rate in Taiwan that will take effect on 1 January 2010. However, Standard & Poor's feels the amendment will result in additional cash outflows for the transactions, as the offshore special-purpose vehicles of the transactions will be subject to a withholding tax of 15 percent from 2010, from the current rate of 6 percent. Despite the higher expected cash outflows, S&P believes the extra costs can be absorbed through the transactions' excess spread or accumulated credit support.

Each of the transaction is ultimately backed by a portfolio of residential mortgage loans denominated in Taiwan dollars and originated by Standard Chartered Bank (Taiwan) Ltd.

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