The nation's 10-year bonds rose for a second day after a newspaper report renewed concern that rising debt defaults will slow economic growth.
The number of borrowers defaulting on their mortgage loans and car loans was likely to increase, the Chinese-language Economic Daily News reported yesterday. Taiwan's growing credit-card debt may also slow economic growth, Fitch Ratings said last month.
"Major financial institutions are putting their funds in bonds," said Arthur Hu, a bond trader at International Bills Finance Corp (國際票券公司) in Taipei. "The credit card loan problem is adding to concerns over economic growth."
The yield on the benchmark 1.75 percent bond due March 2016 fell 0.1 basis point, or 0.001 percentage point, to 1.778 percent at 5:30pm yesterday in Taipei, according to the GRETAI Securities Market, the nation's biggest exchange for bonds. The price rose 0.0065, or NT$6.50 per NT$100,000 face amount, to 99.7448. Bond prices move inversely to yields.
The yield may fall to 1.765 percent this week, Hu said.
Rising defaults forced banks to write off NT$210.8 billion in bad loans and card purchases last year, 30 percent more than in 2004, according to the Financial Supervisory Commission's Web site.
The non-performing loan ratio on credit cards rose to 2.4 percent at the end of December, from 2 percent a year earlier, the commission said.
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