The value of government bonds (G-bonds) traded in the first two months of 2018 reached VND10.5 trillion (US$461.4 million) per session on average, according to data of the Hanoi Stock Exchange (HNX).
As of late February, the total market value of G-bonds reached more than VND1,000 trillion, equivalent to 20 percent of 2017′s gross domestic product (GDP), a 6.3-fold increase compared to late 2009.
Repo trading value accounted for 53 percent of the total, meaning that the G-bond market had seen ample liquidity.
With an aim to restructure the G-bond market, the average term of G-bonds has been extended. The proportion of G-bonds with a term of more than 15 years increased from 20 percent in 2016 to 45 percent in 2017, and in the first two months of 2018, G-bonds with a term of 10 and 15 years had the highest proportions, with 32.1 percent and 21.4 percent respectively.
The winning coupons declined gradually, 0.8-2.5 percentage points lower than banks’ annual interest rates. The average winning coupon in February 2018 slipped in all terms compared to late 2017.
In 2017, there were dozens of sessions that had trading value exceeding VND10 trillion. Repo trading accounted for 49.24 percent of total trading value.
The G-bond market reflects the status of public debt. If the average term of G-bonds extends and the coupons fall, the G-bond issuance is deemed more secure.
According to Phung Quoc Hien, vice chair of the National Assembly, the government has gained significant success in restructuring public debt, especially G-bonds. Short-term debts make up a smaller proportion and the coupons slide.
State Treasury to issue VND200 trillion worth of bonds
The State Treasury of Vietnam has plans to issue government bonds worth VND200 trillion (US$8.8 billion) in 2018, a much higher value than last year, according to Nhan Dan newspaper.
Seven-year bonds will be worth VND36 trillion, while issues of the 10, 15, 20 and 30-year bonds are estimated at VND37 trillion, VND32 trillion, VND20 trillion and VND25 trillion respectively.
However, in the issuance process, the State Treasury may adjust the volume of bonds and their terms in line with market conditions.
In 2017, the Treasury had to cut its issuance plan twice, from VND183 trillion to VND169 trillion. The total value of successfully issued bonds was approximately VND159.9 trillion, or only 87.4 percent of the initial plan.
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