Samson Tu, who helps oversee $1.6 billion of fixed-income securities as a fund manager at Uni-President Assets Management Corp. in Taipei, comments on Taiwan’s bond market in a phone interview today.
“Some people are now thinking Taiwan’s central bank may follow China in easing monetary policy. Keeping borrowing costs stable is Governor Perng Fain-nan’s style and I don’t think Taiwan will lower rates until the end of June 2012. The amount of outstanding central bank bills is still very high. The government will continue to use open-market operations to control liquidity in the financial system.”
The yield on the 1.25 percent securities due September 2021 gained one basis point to 1.325 percent as of 11:38 a.m. local time, prices from Gretai Securities Market show. The yield on the 2 percent bonds due July 2016 fell one basis point to 1.026 percent.
“Government bonds will remain stable and movements are still highly correlated to the performance of stocks. During this time there’s not much money to be made out of government bonds. Bank debt is getting more attention, and investors are demanding lower yields. Issuers with good credit ratings, such as Taiwan Power Co., are seeing more demand.”