Wed, Jul 18, 2012 - Page 13 News List

Concerns spur bidding at bond auction

By Amy Su  /  Staff reporter

Rising concerns over the economy in the near future have prompted domestic financial institutions to increase purchases of the nation’s Treasury bonds to avoid high-risk investments, data from the latest bond auction provided by the central bank showed yesterday.

The central bank yesterday sold NT$30 billion (US$1 billion) of five-year bonds at a yield of 0.877 percent at an auction, with the sale attracting bids for 1.95 times the number of actual bonds on offer, the bank said in a statement.

The 0.877 percent yield was the second-lowest level in history for five-year bonds, which reflected the intense competition in the bidding.

The central bank handled the bond auction on behalf of the Ministry of Finance, which will use the proceeds to finance debt repayment and public infrastructure construction.

Several countries’ central banks have recently cut their policy interest rates to stimulate their economies, while Taiwan’s central bank decided to keep its policy rates unchanged late last month.

However, the nation’s monetary policymaker has been lowering the overnight interbank call-loan rate in recent sessions as part of its open-market operations to help businesses deal with a weaker-than-expected global economy.

Based on the central bank’s data, the overnight interbank call-loan rate closed at 0.457 percent yesterday, down from the 0.46 percent recorded on Friday last week.

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