Bloomberg News

Taiwan Bonds Rally After Sale; Dollar Drops on Greek Referendum

November 02, 2011

Nov. 2 (Bloomberg) -- Taiwan’s government bonds rallied, pushing the 10-year yield to the lowest level in more than a week, after the island sold debt at a lower-than-expected rate.

The government sold NT$35 billion ($1.2 billion) of 20-year bonds at a yield of 1.819 percent yesterday, compared with the 1.86 percent median estimate in a Bloomberg News survey of five finance companies. The local dollar fell for a third day as central bank Governor Perng Fai-nan pledged to “maintain order” in the exchange rate, in response to questions from lawmakers in parliament today.

“The bond sale result was good yesterday as securities firms and insurers were buying to park their money when there are still so many uncertainties out there,” said Samson Tu, who helps oversee $1.6 billion of fixed-income securities as a fund manager at Uni-President Assets Management Corp. in Taipei. “Taiwan bonds have been more volatile recently, mostly affected by stocks.”

The yield on the 1.25 percent bonds due September 2021, the most-traded government securities, declined one basis point to 1.328 percent, prices from Gretai Securities Market show. That’s the lowest level since Oct. 21.

Taiwan’s dollar fell 0.1 percent to NT$30.118 against its U.S. counterpart, according to Taipei Forex Inc.

Stock indexes slumped across Asia on concern Greek Prime Minister George Papandreou’s pledge to put the European Union’s financing package to a referendum risks a disorderly default if voters reject it.

The overnight money-market rate, which measures interbank funding availability, was little changed 0.398 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

--Editors: Andrew Janes, James Regan

To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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