Hanoi (VNA) - Aftertasting success in the first seven months, the issue of Government bonds havebeen facing difficulty from early August with the bidders’ expectation ofrising interest rate and decreasing bank liquidity.
Following the unsuccessfulauctions in the first two weeks of August, the State Treasury was more cautiouslast week, conducting an auction for bonds with three tenures of five, 10 and15 years, totalling only 3 trillion VND (132 million USD). However, no tenurewas issued successfully, with the bid volume dropping sharply to 3.48 trillionVND, the lowest since the beginning of the year.
Bid interest rates also increasedsharply by 10, 17 and 40 basis points for five, 10 and 15-year bonds,respectively.
It was quite in contrast to thesuccess of the G-bond issue in the first seven months of the year when theState Treasury met up to nearly 77 percent of the yearly issue plan. Demandfor G-bonds in the first seven months was often three or four times higher thanthe issued volume that helped the average winning ratio reach 82.5 percent andwinning yield decline significantly.
With the success of the G-bondissue in the first seven months, the National Financial Supervisory Commissionlast month even said if it could maintain the issue rate of roughly 20 trillionVND (881 million USD) per month on average, the State Treasury would meet theG-bond issue plan for the entire 2017 inSeptember.
However, that has changed in thepast three weeks with the only successful auction being held on August 2.
According to SSI Research, theexpectation of changes in the liquidity of the banking system and the interestrate has caused problems for the State Treasury in capital mobilisation throughthe bond issue.
[Roadmap approved to develop bond market]
The interest rate in theinter-bank market last week inched up for the second consecutive week, with theovernight rate rising nine basis points to 0.76 per cent.
The State Bank of Vietnam lastweek also pumped in a total of 4 trillion VND (176 million USD) into theeconomy through the bill issue.
The State Treasury recentlyrevised its bond issue plan with a decrease of five-year bonds from 80.3trillion VND (3.53 billion USD) to 49.3 trillion VND (2.17 billion USD) and anincrease of above seven-year bonds.
The State Treasury needs tomobilise bonds worth 38.8 trillion VND (1.7 billion USD) from now until theyear-end to meet the yearly target after having so far successfully mobilised atotal of 204.5 trillion VND (9 billion USD).
According to SSI Research, withthe slow disbursement rate of the State budget and bond capital, themobilisation of additional G-bonds is not necessary and can lead to waste andrising public debt. Only 5.2 trillion VND (229 million USD) of capital fromG-bonds was disbursed by the end of June, equivalent to 10.4 per cent of theyearly plan.
SSI Research analysts estimatedthat the net capital value of G-bond issues in the first seven months of 2017is some 120 trillion VND (5.28 billion USD), while the amount last year wasnearly 200 trillion VND (8.81 billionUSD).
This is one reason for the risein the proportion of public debt per GDP every year, the analysts noted.-VNA
Following the unsuccessfulauctions in the first two weeks of August, the State Treasury was more cautiouslast week, conducting an auction for bonds with three tenures of five, 10 and15 years, totalling only 3 trillion VND (132 million USD). However, no tenurewas issued successfully, with the bid volume dropping sharply to 3.48 trillionVND, the lowest since the beginning of the year.
Bid interest rates also increasedsharply by 10, 17 and 40 basis points for five, 10 and 15-year bonds,respectively.
It was quite in contrast to thesuccess of the G-bond issue in the first seven months of the year when theState Treasury met up to nearly 77 percent of the yearly issue plan. Demandfor G-bonds in the first seven months was often three or four times higher thanthe issued volume that helped the average winning ratio reach 82.5 percent andwinning yield decline significantly.
With the success of the G-bondissue in the first seven months, the National Financial Supervisory Commissionlast month even said if it could maintain the issue rate of roughly 20 trillionVND (881 million USD) per month on average, the State Treasury would meet theG-bond issue plan for the entire 2017 inSeptember.
However, that has changed in thepast three weeks with the only successful auction being held on August 2.
According to SSI Research, theexpectation of changes in the liquidity of the banking system and the interestrate has caused problems for the State Treasury in capital mobilisation throughthe bond issue.
[Roadmap approved to develop bond market]
The interest rate in theinter-bank market last week inched up for the second consecutive week, with theovernight rate rising nine basis points to 0.76 per cent.
The State Bank of Vietnam lastweek also pumped in a total of 4 trillion VND (176 million USD) into theeconomy through the bill issue.
The State Treasury recentlyrevised its bond issue plan with a decrease of five-year bonds from 80.3trillion VND (3.53 billion USD) to 49.3 trillion VND (2.17 billion USD) and anincrease of above seven-year bonds.
The State Treasury needs tomobilise bonds worth 38.8 trillion VND (1.7 billion USD) from now until theyear-end to meet the yearly target after having so far successfully mobilised atotal of 204.5 trillion VND (9 billion USD).
According to SSI Research, withthe slow disbursement rate of the State budget and bond capital, themobilisation of additional G-bonds is not necessary and can lead to waste andrising public debt. Only 5.2 trillion VND (229 million USD) of capital fromG-bonds was disbursed by the end of June, equivalent to 10.4 per cent of theyearly plan.
SSI Research analysts estimatedthat the net capital value of G-bond issues in the first seven months of 2017is some 120 trillion VND (5.28 billion USD), while the amount last year wasnearly 200 trillion VND (8.81 billionUSD).
This is one reason for the risein the proportion of public debt per GDP every year, the analysts noted.-VNA
VNA
