Taiwan Yields Climb to 7-Month High as Insurers’ Appetite Wanes

Taiwan’s benchmark 10-year yields traded at the highest level in more than seven months as speculation the government will relax restrictions on real estate purchases by insurers cooled demand for bonds.

The island sold NT$35 billion ($1.2 billion) of 30-year notes at 1.795 percent yesterday, 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 on Feb. 21, citing minister Chen Yuh-chang.

“Investors are demanding higher yields for the new issuances,” said George Pu, a bond trader at Sinopac Securities Corp. in Taipei. “Ten-year yields have room to rise even more.”

The yield on the 1.125 percent bonds due March 2023 rose to 1.225 percent from 1.223 percent as of 9:33 a.m. local time, the highest level since July 4, 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 were open today to partly compensate for the loss of working days.

The Taiwan dollar strengthened 0.2 percent to NT$29.609 against its U.S. counterpart, according to prices from Taipei Forex Inc. It gained 0.5 percent this week.

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: Stanley James at sjames8@bloomberg.net

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