Market value of government bonds (G-bonds) hit VND1 quadrillion (US$44 billion) at the end of February, equivalent to 20 per cent of Vietnam’s gross domestic product (GDP) in 2017.
The Hanoi Stock Exchange reported that some VND10.5 trillion ($462 million) worth of G-bonds were traded at each auction on an average in the first two months of 2018.
It said sales and purchases of bonds and stocks accounted for more than 50 percent of the total transaction value of the market, showing the market’s high liquidity. This is also good news for investors interested in the bond market.
To overhaul the regulatory framework for the development of G-bond markets next time, the Ministry of Finance issued a new circular last week regulating the issuance and transaction of G-bonds, effective from April 1.
Circular 15/2018/TT-BTC regulates the costs of issuance, swap, repurchase and payment of G-bonds, government-guaranteed bonds and municipal bonds.
Under the new circular, the bidding fee to issue treasury bills at the State Bank of Vietnam’s Operations Centre will be set at 0.01 per cent of the nominal value of treasury bills issued under the bidding mode.
The bidding fee to issue G-bonds at the stock exchanges will be equal to 0.025 per cent of the nominal value of G-bonds under the bidding mode, but no more than VND1 billion per auction.
In terms of repurchasing G-bonds, the bidding fee is worth 0.0075 per cent of the buyback cost of sovereign bonds under the bidding mode, but no more than VND300 million per auction.
The value of G-bonds issued in 2018 is estimated at some VND180 trillion, with the focus being on long-term maturity and keeping the interest rate at low levels.
According to the Ministry of Finance, G-bonds worth VND159.9 trillion were issued last year, up 4.81 per cent against 2016.
The government last year also approved the roadmap for the development of the bond market from 2017 to 2020 with a vision for 2030, in which the outstanding debt in Vietnam’s bond market is targeted at 45 per cent of the total GDP in 2020 and some 65 per cent of the GDP in 2030.
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