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 follows the 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 a total 2 trillion VND (89 million USD) on offer.

In particular, during a bond auction held by the Hanoi Stock Exchange (HNX) on  November 8, the VST put 89 million USD 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 3.2 trillion VND (142.4 million USD), but the annual registered interest rates remained high at between 4.57 percent and 5 percent. This resulted in no capital mobilised.

Seven-year bonds attracted 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. This sector successfully mobilised 100 billion VND (4.4 million USD) at the final interest rate of 4.87 percent, 0.02 percentage points higher than the picked interest rate on November 1.

Ten-year bonds also gathered a combined value of 1.6 trillion VND (71.2 million USD) from nine bidders. 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 with the winning interest rate of 5.41 percent, 0.01 percentage point lower than at November 1.

The 30-year bond attracted six bidders. The highest was valued at 576 billion VND (25.5 million USD). 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 were auctioned at a winning interest rate of 6.1 percent annually.

For the first auction in November 2015, the treasury managed to mobilise only 1.1 trillion VND (48.9 million USD) worth of Government bonds, out of a total of 3.15 trillion VND (140 million USD) value on offer, at a 37.43 percent 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 6.8 trillion VND (302.6 million USD) 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 156.4 trillion VND (6.9 billion USD) worth of government bonds through bidding on the HNX.-VNA