Government announces bond target

By Kevin Chen  /  Staff Reporter

Mon, Dec 26, 2011 - Page 11

The government is set to sell NT$225 billion (US$7.4 billion) in Treasury bonds in the first quarter of next year to finance debt repayment and funding for the construction of infrastructure, the Ministry of Finance said in a statement posted on its Web site on Friday.

These will cover NT$185 billion in Type-A bonds tagged for debt repayment and special budgets and NT$40 billion in Type-B bonds for public works.

Under the ministry’s definition, Type-A bonds pertain to development funds that are not self-redeeming (or interest is not deductible), while Type-B debts are self-redeeming.

The planned first-quarter sale of NT$225 billion in Treasury bonds will be 60.71 percent higher than the NT$140 billion sold in the current quarter and 21.62 percent higher than the amount sold in the same period last year, ministry data showed.

The ministry did not specify the total value of bonds to be issued next year, saying only that there would be 19 bond issues overall, the statement said.

This year, the government had aimed to sell NT$620 billion in Treasury bonds to fund the state treasury and cope with special budget needs. That was up from NT$610 billion last year, data showed.

The government faces a revised NT$142.6 billion deficit this year after a deficit of NT$167 billion last year. The figure is expected to increase to NT$209.5 billion next year, according to the Directorate-General of Budget, Accounting and Statistics.

In the Friday statement, the ministry said it was set to auction NT$40 billion in five-year bonds on Tuesday next week, NT$40 billion in 20-year bonds on Jan. 17, NT$30 billion in two-year bonds on Feb. 1, NT$35 billion in 30-year bonds on Feb. 8, NT$40 billion in 10-year bonds on March 3 and NT$40 billion in 20-year bonds on March 13.

Apart from the bond sales, the ministry also plans to sell Treasury bills to help state coffers meet short-term capital requirement needs and to repay debt.

However, the ministry said it had no plans to sell Treasury bills in the first quarter, adding that overall there will be nine bill issues for an unspecified amount next year, according to the statement.

The government originally aimed to sell NT$300 billion in Treasury bills this year, compared with the NT$335 billion sold last year.

However, the government has only managed to sell NT$291.2 billion in Treasury bills so far this year, after the ministry failed to auction off the whole NT$30 billion of 182-day Treasury bills on Friday. It sold NT$21.2 billion of 182-day Treasury bills at a yield of 0.85 percent at the auction.