Credit spreads to stabilise in Taiwan's bond market

Credit spreads in Taiwan's bond market are unlikely to widen soon, according to Standard & Poor's Ratings Services.

S&P believes that narrow credit spreads will remain unchanged as a result of ample market liquidity, growing investor confidence, and the market's perception of stabilising domestic credit conditions.

The report said investors' demand for financial instruments offering stable returns and local issuers' preference to fund growth while interest rates remain low should encourage institutions to issue more new bonds in the first half of 2010.

"In our view, new bond issuances in the first half of 2010 should slowly return to the level seen prior to the recent global financial turmoil," said credit analyst Patty Wang. "We expect issuers with strong credit profiles to continue to dominate new issuances but market acceptance is likely to grow of bonds from those issuers rated 'twA-' and above on a national scale," said the S&P report.