All commodities in the specialised G-bond market have been issued through concentrated auctions since 2006 and listed on the Hanoi Stock Exchange (HNX) since 2008. (Photo: VietnamPlus) Hanoi (VNA) – The Government bond (G-bond) market has affirmed its role as an effective and safe capital mobilisation channel for the State budget, and serves as a reference market for interest rates in financial and commodity markets, said insiders.
The G-bond market has recorded impressive results over the last 14 years. The Vietnamese G-bond market was evaluated by the Asian Development Bank (ADB) as one of the fastest-growing markets in East Asia in 2013, 2014, 2018, and 2019.
However, the size of the G-bond market of Vietnam accounts for only 19.77% of the national GDP, remaining modest compared to other countries in the region such as Singapore (49.6%), Thailand (73%), and the Republic of Korea (73.6%). Therefore, there is still ample room for further development of the market.
Efficient and safe channel for mobilising capital
In addition to the roles mentioned above, the G-bond market is considered an attractive investment channel for investors, especially as the national economy was heavily impacted by the complicated developments of the COVID-19 pandemic.
According to HNX, the value of capital mobilised through G-bond auctions has increased in recent times. The total value of mobilized capital in the first eight months of 2023 reached nearly 235 trillion VND, up 114% compared to the same period last year.
The volume of successful G-bond mobilisation through auctions at HNX has surged to 234.96 trillion VND in 2023 from 2.599 trillion VND in 2009.
G-bond market proves efficient capital mobilisation channel (Photo: HNX) According to statistics on the secondary market, as of August 31, 2023, the G-bond market’s value on HNX hit over 1.880 quadrillion VND, equivalent to 19.77% of the GDP in 2022, and up 11.54% compared to 2022, and 11.8 times higher than that reported in 2009.
The total value of the G-bond market in the first eight months of 2023 reached over 953 trillion VND, of which outright transactions accounted for 67.68%. The average trading value reached 5.777 trillion VND per session, surging by 15.8 times compared to 2009. The trading value of foreign investors remained stable, accounting for about 1%-2% of the total value.
Since 2015, large-lot bonds have been issued, thereby reducing the number of bond codes to 300 in 2023 from about 500 codes in 2009. The average value of codes increased about 9 times to about 6 trillion VND per code.
G-bond trading system meets the information access demand of investors, helping significantly save trading costs and time. - Illustrative image (Photo: VietnamPlus) Important tool for public debt restructuring
So far, the legal framework for operating the G-bond market has been finalized and adjusted in accordance with each development stage of the market, and international norms and practices.
The G-bond market has become a crucial channel for mobilising medium and long-term capital for the State budget in association with public debt restructuring through the issuance of long-term bonds.
Notably, the G-bond issuance has affirmed its role as a vital tool for public debt restructuring, contributing to reducing the foreign debt ratio from 73.6% in 2010 to 63.4% in 2015 and 34.8% in 2021.
The average deposit interest rate decreased to about 2% in 2021 from 10% in 2009, while the average issuance term extended from 2-3 years (in 2009) to 12.19 years (in 2021), contributing to restructuring public debt in a safe and sustainable direction.
The issuance through auctions on HNX is organized according to a pre-announced annual issuance plan and an expected mobilization plan for each quarter. This allows market participants to proactively prepare their capital for participation./.
