Government employees handle bonds at the State Bank of Vietnam’s headquarters in Hanoi. (Photo: tapchitaichinh.vn)Hanoi (VNA)- A sluggish period seems in store for the Government bond market. This followsthe second November auction session at which the Vietnam State Treasury (VST)acknowledged only 140 billion VND (6.2 million USD) from bond sales out of atotal 2 trillion VND (89 million USD) on offer.
In particular, during abond auction held by the Hanoi Stock Exchange (HNX) on November 8, the VST put 89million USD worth of bonds on offer, divided equally among four maturityperiods - from five years, seven years, 10 years and 30 years.
The five-year bondsauction attracted 15 participants with bidding value up to 3.2 trillion VND (142.4million USD), but the annual registered interest rates remained high at between4.57 percent and 5 percent. This resulted in no capital mobilised.
Seven-year bondsattracted nine bidders with the highest amounting to 1.5 trillion VND (66 million USD).The lowest interest rate was 4.87 percent and the highest 5.2 percent. Thissector successfully mobilised 100 billion VND (4.4 million USD) at the finalinterest rate of 4.87 percent, 0.02 percentage points higher than the pickedinterest rate on November 1.
Ten-year bonds alsogathered a combined value of 1.6 trillion VND (71.2 million USD) from ninebidders. The lowest interest rate was 5.41 percent. The highest at 6 percent.The result was only 35 billion VND (1.5 million USD) of 10-year bonds sold withthe winning interest rate of 5.41 percent, 0.01 percentage point lower than atNovember 1.
The 30-year bondattracted six bidders. The highest was valued at 576 billion VND (25.5 millionUSD). The lowest interest rate was 6.1 percent and the highest was 7 percent.As a result, only 5 billion VND (222,500 USD) worth of 30-year bonds wereauctioned at a winning interest rate of 6.1 percent annually.
For the first auction inNovember 2015, the treasury managed to mobilise only 1.1 trillion VND (48.9million USD) worth of Government bonds, out of a total of 3.15 trillion VND (140million USD) value on offer, at a 37.43 percent success rate.
Explaining the recentsluggishness of Government bonds, experts from the HNX said since the liquidityof banks, which were the main investors in Government bonds, had gone downhill,as they had to spend capital to meet increased demands for credit at the end ofthe year.
The banking system’sliquidity is narrower than earlier this month. The State Bank has injectednearly 6.8 trillion VND (302.6 million USD) after a constant net withdrawal inthe last five weeks.
However, the interbankinterest rate has slightly increased in all three key terms after weeks ofdecline. From the beginning of the year to date, the VST has mobilised 156.4trillion VND (6.9 billion USD) worth of government bonds through bidding on theHNX.-VNA
