The Government bond market is expected to be more active this year as
investors have shown increasingly strong interest in bond auctions
despite falling coupons, the Saigon Times Daily reported.
At an
auction of the State Treasury on July 29, investors bid for 20 trillion
VND worth of G-bonds compared to 8 trillion VND put up for sale, marking
the biggest bidding volume ever.
At the close of the bidding,
investors snapped up 1 trillion VND of two-year bonds, 2 trillion VND of
three-year bonds, 3 trillion VND of five-year bonds and 2 trillion VND
of 10-year bonds. Despite a strong decline in coupons of tenors of five
years or shorter, banks were still strongly interested in the debt
paper.
According to the Hanoi Stock Exchange (HNX), the organizer
of G-bond auctions, the winning coupon of two-year bonds was 5.25
percent per annum, dropping by 0.12 percentage point against the
previous session on July 11.
Meanwhile, three-year bonds reported
a winning coupon of 5.68 percent per annum, or 0.11 percentage point
lower than on July 17. The winning coupons for five and 10-year tenors
were 6.68 percent and 8.48 percent per annum respectively.
Since
early this year, the State Treasury has mobilised 139.6 trillion VND
from G-bond sales, exceeding the total in all of 2013.
As Moody’s
suddenly upgraded Vietnam’s sovereign bond rating from B2 to B1 on July
29, investors are expected to flock to the G-bond market while other
investment channels have turned sluggish. The stable exchange rate and
low inflation have also bolstered investor confidence.
The State
Treasury estimates to launch 50 trillion VND worth of treasury bills and
bonds onto the market in the third quarter, higher than the 47 trillion
VND in the second quarter but lower than the 75 trillion VND in the
first quarter.
Three- and five-year bonds will make up the
largest ratio of the third quarter bond volume, followed by one year,
two years and 10 years.
Experts from Bao Viet Securities Company said that there is a shift from short to long tenors in this quarter.
The
volume of two-year bonds issued has dropped repeatedly since early this
year from 17.6 trillion VND in the first quarter to 9.5 trillion VND in
the second quarter and an estimated 6 trillion VND in the third
quarter. Meanwhile, five-year bond issues are expected to bounce back
strongly.
The move suggests that banks, which are active on the
bond market, will improve their capital structure by raising their
medium-term capital ratio, the experts said.-VNA