The yield of Government bonds (G-bond) has continued to decline and hit seven-month lows as the US Federal Reserve (Fed) seems unlikely to hike interest rates and the domestic monetary market has shown positive movements.

Reports on the G-bond market by Saigon Securities Inc showed the local bond market had a very active week ending February 15, with the total bond volume registered to buy four times higher than that offered.

On the primary market, investors paid the most interest on 10-year and 15-year bonds, buying all bonds worth up to VND9 trillion (US$386 million) offered for auction last week.

The winning yields of bonds at all terms continued to drop compared to the previous session, with seven-year bonds seeing the largest reduction of 12 basis points. The declining rates for 10-year, 15-year and 30-year bonds were 10, 9 and 1 basis points, respectively.

The sharp decline of the G-bond yield was also seen in the secondary market with a decrease of 9.63 basis points for one-year to 15-year bonds, in which short-term bonds posted the highest decline. Specifically, the yields for one-year, three-year, five-year, ten-year and 15-year bonds were reduced to 2.61, 3.17, 3.57, 4.63 and 5.0 per cent, respectively.

“The yield of G-bonds has declined strongly since the beginning of 2019 and now returns to the level of seven months ago,” SSI reported, adding investors have recently increased bond purchases in both primary and secondary markets with an expectation of continued decline in yields when there is no longer pressure of Fed interest rate hikes and the domestic monetary market is witnessing positive movements.

Market liquidity in the bond market also continuously improved last week, with total transaction volume reaching VND33 trillion, an increase of 33 per cent compared to the week before the Lunar New Year holiday.

Foreign investors continued to net buy VND724 billion during the week, of which they poured the most in three-year and five-year bonds with VND423 billion. The investors meanwhile net sold VND382 billion for 25-year and 30-year bonds. — VNS