Over 108.5 billion USD raised from primary G-bond market in 12 years

Hanoi (VNA) – The Government bond market of Vietnam officially became operational at the Hanoi Stock Exchange (HNX) on September 24, 2009. Since then, about 2.47 quadrillion VND (108.5 billion USD) has been raised for the State budget from the primary market to support socio-economic development in the country.

More than 206 trillion VND worth of G-bonds has been raised for the State budget annually, accounting for almost 10 percent of total investment in society in 2020 and 28.3 percent of that by the State sector last year.

Bond issuance volume up, interest rates down

The HNX said that in order to mobilise the above mentioned sum of money, it has organised more than 2,600 auctions, with 60 - 70 percent of the bonds offered successfully sold on average.

Notably, interest rates in the G-bond market have declined considerably over the past 12 years. This has helped the State budget save trillions of VND worth of interest payments and has also helped to support State agencies in macro-economic governance.

Annual interest rates have dropped by 4 - 6 percent for all maturities. The sharpest falls can be seen in the five-year maturity (from 10.49 percent in 2009 to just 1 percent in 2021) and the 10-year maturity (from 9.7 percent in 2009 to 2.06 percent this year).

Meanwhile, G-bond maturities have also been extended from an average of 2 - 3 years in 2009 to 13.8 years in 2020.

On the secondary market, G-bond transactions have also been on the rise.

The HNX reported that total outstanding debt in the form of G-bonds reached 1.4 quadrillion VND by the end of August this year. This is an 8.7-fold rise from that of 2009. The bond liquidity in 2021 stood at 10.8 trillion VND per trading session, which is 29.7 times higher than that 12 years ago.

Multi-price auctions to be held

The HNX said the G-bond market has become an important capital mobilisation channel for the State budget in the medium and long terms. The G-bond issuance has been associated with the restructuring of Government debt by issuing longer-term bonds and diversifying investors.

A representative of the State Treasury of Vietnam noted that more bonds have been issued via auctions so as to enhance competitiveness and transparency. In the future, multi-price auctions will be officially organised so as to improve the flexibility of identifying auction results.

The G-bond issuance has established itself as a tool for restructuring public debt, helping to reduce the percentage of foreign loans from 73.6 percent in 2010 to 63.4 percent in 2015 and 34.8 percent in 2021. The average annual yield rate has declined from about 10 percent in 2009 to 2 percent this year, thereby helping to restructure public debt in a safer and more sustainable manner, according to the HNX.

To develop the G-bond market in the years to come, the HNX said it will follow the State’s viewpoint on developing the stock market in both size and quality, strengthen the competitiveness of the parties to the market, promote the application of advanced technology, and approach international practices and standards in this regard.

The exchange is going to diversify bonds and maturities on the primary market. Meanwhile, on the secondary market, it will boost development of the foundation for long-term investors such as voluntary pension funds and affiliated insurance funds in order to attract foreign investors and professional investment institutions from around the world to the G-bond market of Vietnam.

In addition, the corporate bond market will also be promoted in the coming time, the HNX said./.