Demand for long-end TGBs to fall on the back of rising demand for Formosa bonds

Standard Chartered notes its views on TWD rates as follows....

• A neutral policy stance and ample liquidity supports the short end of the curve. 
  
  
• We remain constructive on demand for 5Y and 10Y Taiwan Government Bonds (TGBs) but less positive on the long end of the curve as life insurance companies have starting to shift from TGBs to onshore foreign-currency bonds (Formosa bonds) due to regulatory change. 
  
  
• The issuance of CNH Formosa bonds increased significantly to USD 1.4bn in March from USD 300mn in February.
  
  
• Moreover, YTD US dollar Formosa bond issuance has also risen to USD 9.6bn versus full-year issuance of USD 20.3bn in 2014. We expect demand for long-end TGBs to fall on the back of rising demand for Formosa bonds.