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Taiwan 10-Year Yields Approach Three-Month High on More Sales

Taiwan’s government bonds were little changed, with the 10-year yield approaching the highest level in almost three months, after the country said it will increase debt sales next quarter. The local dollar gained.

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 Dec. 22. The offerings will include 15-year securities, the first of that maturity since 2005. The central bank left interest rates unchanged at 1.875 percent on Dec. 19 and governor Perng Fai-nan said economic growth will be “steady and slow” next year as exports and private investment recover.

“The market is still reacting on more sales and the rare 15-year bond auction in 2013,” said Samon Tu, a Taipei-based fund manager at Uni-President Assets Management Corp., which oversees $700 million. “Lingering concern over the prospect of economic growth will stop the yields from rising too much.”

The yield on the 1.125 percent notes due September 2022 was little changed at 1.159 percent as of 9:29 a.m. local time, according to Gretai Securities Market. It touched 1.16 percent yesterday, the highest level since Oct. 2. Borrowing costs on benchmark 10-year bonds dropped 13 basis points in 2012.

Taiwan’s dollar climbed 0.3 percent to NT$29.049 against its U.S. counterpart, based on Taipei Forex Inc. prices. The currency has appreciated 4.3 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, fell five basis points to 2.95 percent. It was 6.30 percent at the end of 2011.

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: John Liu at jliu42@bloomberg.net

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