According to the weekly capital market report of Saigon Securities Incorporation (SSI)’s Investment Analysis and Advisory for the week from December 9th to 13th, Vietnam Development Bank (VDB) stopped offering tender after four consecutive weeks of issuance. The State Treasury offered six trillion dong with terms of 10, 15 and 20 years. The demand for bonds of 10 and 15 years were fairly high and the whole offer was sold out. These are also the two terms preferred by commercial banks.
The winning interest rate uptrend slowed down in recent sessions and inched up by two basis points (bps) on 15-year term. For 20-year bonds, the registered volume was only equivalent to 67 percent of the offer volume and no winning issuance was recorded. The lowest registered interest rate was 4.06 percent per annum on 20-year term, still four bps higher than the winning rate in the latest session at the end of November.
From the beginning of the year, a total of 197.419 trillion dong of government bonds (G-bonds) were issued, 19 percent higher compared to 2018, mainly to finance the repayment of principal debts. The G-bond increase (issuance minus maturity) from the beginning of the year until now actually declined by 28 percent over the whole year 2018. The issuance volume of five-year and seven-year terms continued to be narrowed down, reaching only 13.7 trillion dong, equivalent to seven percent of the total issuance volume. The average winning bond term increased from 12.15 years in 2018 to 13.57 years.
About 128 trillion dong of G-bonds will mature in 2020 (including one billion US dollars of foreign currency bonds) 11.6 percent higher than 2019. SSI Research said that, the need to invest in G-bonds to increase liquidity assets of commercial banks and the trend of monetary easing will possibly make G-bond interest rates to further decline in 2020, but the reduction will be much smaller than 2019, reaching around 30-50 bps.
On the secondary market, the interbank liquidity slightly fell, causing interest rates to inch up across most terms. Specifically, the G-bond interest rates for terms of one year, three years, five years, 10 years, 20 years and 30 years are respectively 1.55%, 1.82%, 2.01%, 3.51%, 3.65%, 4.07%, and 4.49 percent per annum, respectively up by six bps, down by seven bps, up by three bps, up by one bp, up by two bps, up by two bps, and down by one bp compared to the previous week.
The market liquidity was improved with total trading value only reaching 45.7 trillion dong, up by 10.5 percent compared to the previous week, in which outright transactions accounted for 58%. Foreign investors sharply net bought up to 1.878 trillion dong after two months. The trading was week and saw mainly net buying. The net buying terms were mainly 25-30 years, reaching a trading of up to 1.988 trillion dong. From the beginning of the year until now, foreign investors net purchased 15.153 trillion dong on the secondary bond market.
