G-bonds set record in 2016
HANOI - VND281.75 trillion worth of G-bonds was sold in 2016, meeting 98.3% of the plan, with 91% of this volume having a term of five years or longer.
The above figures were published by the Ministry of Finance at a press meeting on “the bond market in 2016 and orientations for development in the coming years” held in Hanoi on February 28.
With such results, the target of 70% of the issued volume having a term of five years or longer set by the National Assembly was beat. Also, for the first time, G-bonds with a 30-year maturity were successfully launched to foreign investors in 2016.
After restructuring, the G-bond portfolio displayed a remarkable improvement in terms of size, maturity and cost, the Finance Ministry said.
Specifically, G-bonds stood at 27.3% of GDP last year, versus 16.2% in 2015.
The average term of the bonds sold was 8.71 years, 1.73 years longer than in 2015, which extended the average maturity of the Government debt portfolio by the end of 2016 to 5.98 years, up 1.54 years against late 2015. The average coupon was 6.49%, down 22 to 50 basis points across the board.
Investors’ appetite underwent a positive change with a rise in the holding of long-term bonds such as social insurance, deposit insurance and bonds issued by insurers (from 23% in 2015 to 44.6% in 2016), while the holding of bonds launched by banks dipped (from 77% to 55.4%).
On the secondary market, the trading volume sharply surged against 2015, reaching VND6.3 trillion per session on average, up 72% compared to the preceding year, contributing to the significant improvement of the market liquidity.
Bonds guaranteed by the Government and local G-bonds in 2016 basically met the requirements for capital mobilization of policy banks to carry out the credit programs initiated by the State and local authorities targeting the essential and urgent projects. However, the Finance Ministry did not reveal the specific figures.
As for corporate bonds, the volume sold last year was more than VND129.63 trillion, a spectacular increase of 203.1% from 2015, said the ministry.
Despite the above results, bond markets remain small, accounting for 36.9% of GDP. The corporate bond market is underdeveloped, representing only 5.27% of GDP by the end of last year, and enterprises are still mainly raising capital from banks, said the ministry.