State Treasury plans more market-friendly manoeuvres

Monday, Oct 28, 2013 08:05

By late September, a total of VND145.812 billion ($6.9 million) had been mobilised, representing 108 per cent of the figure recorded in 2012.

HCM CITY (Biz Hub)— The State Treasury will carry out several new measures in order to create an impetus for capital mobilisation, according to the Viet Nam Financial Times.

The paper quoted Tran Minh Hang, deputy general director of the treasury, as saying that in the first six months of the year, more than VND124.331 billion (US$5.9 million) had been raised through the issue of government bonds.

By late September, a total of VND145.812 billion ($6.9 million) had been mobilised, representing 108 per cent of the figure recorded in 2012.

These figures are seen as positive, helping ease pressure on the State Budget and partly meeting the Government's capital demand for spending and development investments.

Hang said the positive results were made possible by increased economic stability with growth rate and inflation maintained at reasonable levels.

These changes helped improve investors' confidence in the government bond market and facilitated capital mobilisation, she said.

Hang also said that mobilisation is likely to be slower in the remaining months of the year.

Since the third quarter, many tenders for government bonds did not generate expected results and there were even instances of failure, she said.

She explained that interest yielded by government bonds were no longer attractive to investors. In addition, recent fluctuations in the exchange rate and a tendency among foreign investors to withdraw capital from new markets including Viet Nam.

Furthermore, commercial banks, which have always been customers of bonds when other investment channels prove less profitable or loss-making, were also short of capital.

With production and service industries entering the year's peak season, enterprises were increasing their borrowings from banks, which means that the latter did not have much capital left to invest in government bonds, Hang said.

To improve the situation, the State Treasury announced early this month a multi-pronged plan to mobilise VND25.2 trillion ($1.94 billion) in the fourth quarter by issuing bonds with terms from less than one year to 10 or 15 years.

Under the scheme, the agency would increase the frequency of issuing bonds and treasury bills.

In addition to issuing bonds with terms of between two and 10 years, it would issue treasury bills that would mature in 26 weeks.

The short and long term bonds aim to mobilise all idle capital sources from banks, insurance companies and investment funds.

The treasury would also organise regular meetings with investors to assess real demand and provide the market with proper products.

Flexibly adjusting the rate of government bonds in ways that would match market fluctuations and the central bank's monetary policies is another important measure that will be taken in the capital mobilisation effort.

The office also said it would continue restructuring the catalogue of listed bonds in line with the approved plan to improve liquidity in the bond market. — VNS

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