Fri, Apr 13, 2007 - Page 11 News List

Ten-year bonds reach eight-month high after central bank sells short-term securities

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Taiwan's 10-year government bonds pared losses as a surge in yields to an eight-month high spurred an increase in demand yesterday.

Investors bought the securities after the early decline made bond prices more attractive, said Arthur Hu, a bond trader at International Bills Finance Corp (國際票券).

Ten-year notes slumped at the start of trading after the central bank on Wednesday drained funds from the banking system by selling NT$239.2 billion (US$7.2 billion) of short-term securities. The yield on the benchmark 1 7/8 percent bond due March 2017 rose 0.1 basis point, or 0.001 percentage point, to 2.014 percent at 4pm in Taipei, after earlier climbing as much as 4.9 basis points, according to Gretai Securities Market. The price fell 0.0061, or NT$6.1 per NT$100,000 face amount, to 98.7613.

The central bank raised its benchmark discount rate on 10-day loans to banks by an eighth of a percentage point to 2.875 percent on March 29.

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