The G-bond market has made impressive progress in terms of scale, becoming an effective capital raising channel for the State Budget, contributing significantly to the economic development of the country. (Source: tamnhin.net.vn) Hanoi (VNS/VNA) - Over the past 10 years, the interest rates ofsuccessfully-issued Government bonds (G-bonds) have decreased significantly, savingthousands of billions of VND for the State budget, contributing to regulate andstabilise the macroeconomy.
September24 this year was an important milestone for the G-bond market, marking 10years since its inception. The G-bond market has made impressive progress interms of scale, becoming an effective capital raising channel for the StateBudget and contributing significantly to the economic development of the country.
In theprimary market, over 10 years, more than 1.8 quadrillion VND (77 billion USD)has been mobilised for the State Budget.
Thisfigure corresponds to average annual mobilisation of more than 180 trillion VND,accounting for 10.6 percent of the total social investment capital in 2018, 31 percentof the State sector’s total investment capital in 2018.
About1,872 auctions were held with an average successful mobilisation ratio of 60-70percent of the total bid volume.
Theaverage annual interest rate of G-bonds has decreased by 4 to 6 percent peryear for all maturities. In particular, there has been a sharp decline in5-year terms, down from 10.49 percent per year in 2009 to 3.55 percent per yearin 2019, and 10-year terms, down from 9.7 percent per year in 2009 to 4.35 percentper year in 2019.
Incontrast to the decrease in interest rates, the maturities of bonds haveincreased.
So far,the State Treasury has successfully issued G-bonds with terms of up to 30years.
Thanks tothe diversity of maturities, investors have more options, which helps reducethe pressure to pay debts in the short term.
If in2009, G-bonds were issued with only four maturities of 2, 3, 5 and 10 years, ofwhich the maturities of 5-year and more accounted for only 15 percent of totalissuance. In 2019, three more maturities of 15, 20 and 30 years were added, andthe maturities of 10 years and more accounted for 90 percent of the totalissuance.
In thesecondary market, the number of G-bond transactions also increased. Bond liquidityin 2019 reached more than 9 trillion VND per session, nearly 24 times higherthan in 2009.
Thetrading volume through repurchase agreements (repos) also grew strongly,accounting for 6.5 percent of the total trading value of the bond market in2009 to 55 percent in 2019.
With theever-improving market legal framework, over the past 10 years, the G-bondmarket has continuously welcomed new products on both primary and secondarymarkets, meeting the diverse investment needs of the market.
In theyears 2013, 2014, 2018 and 2019, Vietnam’s G-Bond Market was named one of themarkets with the strongest growth rate in East Asia by the Asia DevelopmentBank (ADB)./.
VNA
