Domestic financial institutions have increased their purchases of the nation’s Treasury bonds to avoid high-risk stock market investments, data from the latest bond auction showed.
The central government sold NT$40 billion (US$1.33 billion) of 10-year bonds at a yield of 1.21 percent at auction yesterday, with the sale attracting bids for 1.4 times the amount of bonds on offer, the central bank said in a statement yesterday.
The 1.21 percent yield marked the lowest level in history for the 10-year bonds, reflecting the intense bidding, the bank’s data showed.
The results indicated the eurozone’s continuing debt crisis and the domestic economic slowdown induced more investors to add to their bond holdings as a hedge against uncertainties in the stock market.
The bond market in the eurozone has shown the opposite trend. The yield on 10-year bonds issued by the Spanish government climbed over the psychologically critical 7 percent mark earlier this week, heightening fears about the eurozone debt crisis.
In related news, the Ministry of Finance announced yesterday that it would issue NT$125 billion of Treasury bonds during the third quarter and that it would use the proceeds to refinance old government debt.
The planned third-quarter bond sales will be 32.43 percent less than the NT$185 billion sold in the current quarter, but the same as the NT$125 billion sold in the third quarter of last year, ministry data showed.
The ministry plans to auction NT$30 billion of five-year bonds on July 17, NT$30 billion of 20-year bonds on Aug. 7, NT$30 billion of 30-year bonds on Aug. 21 and NT$35 billion of 10-year bonds on Sept. 24.
The ministry sold a record NT$620 billion of Treasury bonds last year because the government needs new funds to finance debt and build infrastructure.
Apart from Treasury bonds, the ministry said it would also issue NT$65 billion of Treasury bills in the third quarter.
The ministry sold NT$80 billion of Treasury bills in the second quarter and NT$65 billion a year earlier, ministry data showed.