Government bond market experiences sluggish sales
A sluggish period seems in store for the Government bond market. This follows the second November auction session at which the Vietnam State Treasury (VST) acknowledged only VND140 billion (US$6.2 million) from bond sales out of a total VND2 trillion (US$89 million) on offer.
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In particular, during a bond auction held by the Hanoi Stock Exchange (HNX) on November 8, the VST put US$89 million worth of bonds on offer, divided equally among four maturity periods - from five years, seven years, 10 years and 30 years.
The five-year bonds auction attracted 15 participants with bidding value up to VND3.2 trillion (US$142.4 million), but the annual registered interest rates remained high at between 4.57% and 5%. This resulted in no capital mobilised.
Seven-year bonds attracted nine bidders with the highest amounting to VND1.5 trillion (US$66 million). The lowest interest rate was 4.87% and the highest 5.2%. This sector successfully mobilised VND100 billion (US$4.4 million) at the final interest rate of 4.87%, 0.02 percentage points higher than the picked interest rate on November 1.
Ten-year bonds also gathered a combined value of VND1.6 trillion (US$71.2 million) from nine bidders. The lowest interest rate was 5.41%. The highest at 6%. The result was only VND35 billion (US$1.5 million) of 10-year bonds sold with the winning interest rate of 5.41%, 0.01 percentage point lower than at November 1.
The 30-year bond attracted six bidders. The highest was valued at VND576 billion (US$25.5 million). The lowest interest rate was 6.1% and the highest was 7%. As a result, only VND5 billion (US$222,500) worth of 30-year bonds were auctioned at a winning interest rate of 6.1% annually.
For the first auction in November 2015, the treasury managed to mobilise only VND1.1 trillion (US$48.9 million) worth of Government bonds, out of a total of VND3.15 trillion (US$140 million) value on offer, at a 37.43% success rate.
Explaining the recent sluggishness of Government bonds, experts from the HNX said since the liquidity of 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 of the year.
The banking system’s liquidity is narrower than earlier this month. The State Bank has injected nearly VND6.8 trillion (US$302.6 million) after a constant net withdrawal in the last five weeks.
However, the interbank interest rate has slightly increased in all three key terms after weeks of decline. From the beginning of the year to date, the VST has mobilised VND156.4 trillion (US$6.9 billion) worth of government bonds through bidding on the HNX.
