Taiwan 10-Year Bond Yields Reach 3-Month High on Sales Increase

Taiwan’s government bonds dropped, sending the 10-year yield to the highest level in almost three months, after the government said it will increase debt sales next quarter. The local dollar climbed.

Issuance will rise to NT$275 billion ($9.5 billion) in the next three months, 22.2 percent more than the same period of 2012, according to a statement from the Ministry of Finance posted on its website Dec. 22. The offerings will include 15- year securities, the first of that maturity since 2005.

“The surprise is that there will be more sales, especially of longer maturities,” said James Wang, a fixed-income trader at Yuanta Securities Co. in Taipei. “The yield curve will probably steepen.”

The yield on the 1.125 percent notes due September 2022 rose one basis point to 1.159 percent as of 10:14 a.m. local time, the highest level since Oct. 1, according to Gretai Securities Market. Borrowing costs on benchmark 10-year bonds dropped 13 basis points in 2012.

Taiwan’s dollar gained 0.2 percent to NT$29.057 against its U.S. counterpart, based on Taipei Forex Inc. prices. The currency has appreciated 4.2 percent this year, poised for a fourth annual gain. One-month implied volatility, a measure of expected moves in exchange rates used to price options, held at 3 percent. It was 6.30 percent at the end of 2011.

Global funds bought NT$1.2 billion more Taiwanese stocks than they sold this month, bringing net purchases this year to $4.5 billion, according to exchange data.

The overnight interbank lending rate was steady at 0.388 percent, a weighted average compiled by the Taiwan Interbank Money Center shows.

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

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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