Q1 G-bond sale plan 87% complete
HCMC - The State Treasury of Vietnam issued VND56.5 trillion of G-bonds in the first three months of the year, meeting 87% of the plan for the first quarter.
The two best-selling types of debt were those with five and seven-year tenors, with total respective sales of VND13.55 trillion and VND12.6 trillion, but they were below expectations for the quarter. Meanwhile, bonds of 15 years or longer were greatly sought after but their volumes were small.
This indicates G-bond sales on the primary market were lower than in 2016. Financial institutions, insurance companies and banks are eyeing long-term bonds given their high coupons.
Interest rates for Vietnamese dong on the interbank market hovered around 5% a year for terms of less than a month, a mild increase driven by the start of a new round of setting aside cash for compulsory reserves, plus the pressure from debts falling due on open market operations (OMO). This led to a minor decline in liquidity on the primary monetary market.
Although the State Treasury recently offered higher interest rates for five-year bonds, sales remained poor due to the interest rate difference between the secondary and primary markets.
At a G-bond auction last Wednesday, the State Treasury offered VND5 trillion of bonds with four tenors: five years with VND1 trillion, seven years with VND1 trillion, 10 years with VND1.5 trillion and 30 years with VND1.5 trillion.
Financial institutions bought VND550 billion of five-year debt, VND550 billion of seven-year debt, VND1.95 trillion of 10-year debt and VND1.95 trillion of 30-year debt. The respective coupons were 5.12%, 5.43%, 5.99% and 7.85% a year, five basis points lower than those at the March 29 auction.
Overall, the State Treasury of Vietnam has in the year to date issued around VND61.5 trillion of debt. On the secondary bond market, foreigners remained net buyers. Since the beginning of the year, foreigners have net bought about VND11.92 trillion of G-bonds.
Bond coupons on the secondary market tend to inch up for terms of two, three, five and seven years, reaching 4.792%, 4.982%, 5.216% and 5.56% respectively.
Meanwhile, the annual rates for bonds with one-year, 10-year and 15-year terms have fallen by 3.4-9.8 basis points to 4.14%, 6.11% and 6.96% respectively.