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Bank sells $244m of 3, 5, 10-year bonds

Update: November, 02/2015 - 08:10

HA NOI (VNS) — Three-year bonds were sold out, while the sales of bonds with longer terms were unsatisfactory during an auction on the Ha Noi Stock Exchange last week.

The bonds were issued by the Viet Nam Development Bank (VDB) and guaranteed by the government.

As much as VND3 trillion (US$120 million) worth of three-year bonds were sold at a winning interest rate of 6.54 per cent per year, 0.09 percentage point lower than the rate recorded during the previous trading session, October 22.

Of another VND3 trillion worth of five-year bonds, VND2.3 trillion ($102.22 million) were auctioned at a winning rate of 7.35 per cent per year, equivalent to the rate of the previous session.

Meanwhile, 10-year bonds worth VND500 billion ($22.22 million) and 15-year bonds worth the same, went unsold.

In a related development, the National Assembly's (NA) Committee for Finance and Budget has supported the government's proposal to diversify the terms of State bonds again, a plan expected to be implemented next month.

The NA resolved in November last year that the finance ministry's state treasury would only be allowed to issue bonds with terms of five years or more, as a measure to ease pressure resulting from public debt burdens.

However, the government has proposed the re-issuance of one-year, two-year and three-year bonds, expecting that more types of bonds will accelerate a slowing State bond market.

In an economic report for the first 10 months of this year, the National Financial Supervisory Commission (NFSC) noted that it is unlikely that the country's annual bond issuance target will be reachable.

State bond issuances totalled nearly VND127.50 trillion ($5.7 billion) in the first nine months, representing more than half of the VND250 trillion ($11.1 billion) targeted for this year.

The NFSC said that, if there are no suitable adjustments related to interest rates and the terms of the bond, the bond issuances may reach only some VND160 trillion ($7.1 billion) in 2015.

According to the Ha Noi bourse, VDB alone has mobilised more than VND20.75 trillion ($922.22 million) from bond auctions this year. — VNS

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