Bank sells 244 million USD of 3, 5, 10-year bonds

Illustrative image (Source: hanoimoi.com.vn)

Three-year bonds were sold out, while the sales of bonds with longer terms were unsatisfactory during an auction on the Hanoi Stock Exchange last week.

The bonds were issued by the Vietnam Development Bank (VDB) and guaranteed by the Government.

As much as 3 trillion VND (120 million USD) worth of three-year bonds were sold at a winning interest rate of 6.54 percent per year, 0.09 percentage point lower than the rate recorded during the previous trading session, October 22.

Of another 3 trillion VND worth of five-year bonds, 2.3 trillion VND (102.22 million USD) were auctioned at a winning rate of 7.35 percent per year, equivalent to the rate of the previous session.

Meanwhile, 10-year bonds worth 500 billion VND (22.22 million USD) and 15-year bonds worth the same, went unsold.

In a related development, the National Assembly's (NA) Committee for Finance and Budget has supported the Government's proposal to diversify the terms of State bonds again, a plan expected to be implemented next month.

The NA resolved in November last year that the finance ministry's state treasury would only be allowed to issue bonds with terms of five years or more, as a measure to ease pressure resulting from public debt burdens.

However, the Government has proposed the re-issuance of one-year, two-year and three-year bonds, expecting that more types of bonds will accelerate a slowing State bond market.

In an economic report for the first 10 months of this year, the National Financial Supervisory Commission (NFSC) noted that it is unlikely that the country's annual bond issuance target will be reachable.

State bond issuances totalled nearly 127.50 trillion VND (5.7 billion USD) in the first nine months, representing more than half of the 250 trillion VND (11.1 billion USD) targeted for this year.

The NFSC said that, if there are no suitable adjustments related to interest rates and the terms of the bond, the bond issuances may reach only some 160 trillion VND (7.1 billion USD) in 2015.

According to the Hanoi bourse, VDB alone has mobilised more than 20.75 trillion VND (922.22 million USD) from bond auctions this year.-VNA