Unravelling Hedge Fund Trade Derails Boom in Taiwan Convertibles

(Bloomberg) — A lucrative hedge fund trade in Taiwanese convertible bonds has been derailed by regulatory changes, disrupting issuance in one of the hottest capital markets for the island’s tech sector. About $2.7 billion in planned US dollar-denominated convertible bond sales filed over the past six months remain stalled and have had to file for extensions, according to Bloomberg calculations based on regulatory filings and historical issuance data. Fresh volatility in foreign-exchange markets has hampered the hedging structures typically embedded in such offerings, according to people familiar with the matter, who asked not to be identified discussing private information. Offshore…