Bloomberg News

Taiwan Bonds Advance on European Growth Concern; Currency Gains

March 02, 2012

Taiwan’s government bonds gained, with benchmark 10-year yields dropping the most in more than two weeks, on concern economic growth is stalling in European countries. The local dollar advanced.

The island will sell NT$40 billion ($1.4 billion) of 10- year debt at 1.283 percent today, according to the median estimate of fixed-income traders in a Bloomberg News survey.

Spanish Prime Minister Mariano Rajoy announced yesterday a new deficit target of 5.8 percent of gross domestic product, compared with the 4.4 percent target previously agreed on with the European Union. January retail sales in Germany declined 1.6 percent from December, the Federal Statistics Office said yesterday. That fell short of a median 0.5 percent gain predicted by economists.

“The banking industry and insurers should have decent appetites for the bonds,” said Ivy Leung, a Taipei-based fixed- income trader at Polaris Securities Co. “Yields also came down as there’s some concern on Europe.”

The yield on the government’s 1.25 percent bonds due March 2022 fell one basis point to 1.274 percent, prices from Gretai Securities Market show. That’s the biggest decline for benchmark 10-year rates since Feb. 15.

The Taiwan dollar rose 0.1 percent to NT$29.429 against its U.S. counterpart, according to Taipei Forex Inc. The currency reached NT$29.30 on March 1, the strongest level since Sept. 9.

The overnight money-market rate, which measures interbank funding availability, was little changed at 0.4 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

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

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net


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