Taiwan Bonds Decline After Insurers’ Appetite Wanes at Auction

Taiwan’s government bonds fell, with 10-year yields rising the most since Feb. 4, as speculation the government will relax restrictions on real estate purchases by insurers cooled demand for the securities.

The island sold NT$35 billion ($1.2 billion) of 30-year notes at 1.795 percent today, compared to the 1.75 percent median estimate of seven fixed-income traders surveyed by Bloomberg. The Financial Supervisory Commission will lift a ban on insurance companies buying real estate, the Economic Daily News reported yesterday, citing minister Chen Yuh-chang.

“Insurers are turning cold on bonds as they might get to buy real estate again,” said Sam Chang, a fixed-income trader at Yuanta Securities Co. in Taipei. “They became less aggressive in bidding and got more picky on yields.”

The yield on the 1.125 percent bonds due March 2023 rose one basis point, or 0.01 percentage point, to 1.222 percent, according to Gretai Securities Market. It increased one basis point from Feb. 6.

Taiwan’s stock and debt markets were closed from Feb. 7 through Feb. 15 for the Lunar New Year holiday and will be open tomorrow to partly compensate for the loss of working days.

Currency Strengthens

The Taiwan dollar gained 0.1 percent to NT$29.658 against its U.S. counterpart, according to prices from Taipei Forex Inc. It rose 0.3 percent in the past five days. Its one-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 10 basis points today, and four basis points from the end of last week, to 4.95 percent.

The central bank has sold the local currency near the close on most days in the past 11 months, according to traders who asked not to be identified.

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

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

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net

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