Demand for G-bonds rises, but yield falls

Tuesday, Oct 07, 2014 17:42

Yield of Government bonds fall in the market while the demand for G-bonds grows fast this week.— Photo

HA NOI (Biz Hub) — The government bond yields fell, while the GDP in Q3 grew compared with the last two quarters, said analysts from VP Bank Securities (VPBS) on October 6.

The national GDP was 6.19 per cent this quarter, an increase of 0.77 per cent over the second quarter and 1.1 per cent over the first quarter, according to VPBS analysts. They also reported an increasing demand for government bonds in the market, adding that the yields have fallen to its recorded low level and that the trend will continue this week.

Data from the securities company said that from September 29 to October 3, the State Treasury sold all VND5 trillion ($235 million) notes that it offered at the auction in Ha Noi. The interest rates of the bonds ranged between 5.05 and 6.96 per cent. The interest rates of bonds in the previous month ranged between 5.79 and 7.48 per cent.

According to the auction organiser, the Ha Noi Stock Exchange, it was the fourth consecutive time that the State Treasury sold all bonds, adding that the Ha Noi Treasury also sold VND780 billion ($37 million) earlier. Thus, as of October 3, VND190.5 trillion ($9.08 billion) of G-bonds have been raised so far.

In the secondary market, from September 29 to October 3, foreign investors bought a net VND57.4 billion ($2.73 million) of bonds through outright and repos transactions.

According to data from, yields continued to decline across the secondary market. The per year yields of one, two, three, five, seven and 10-year bonds was at 4.18 per cent (down 17 basis points), 4.49 per cent (down 17 basis points), 4.70 per cent (down 22 basis points), 5.01per cent (down 46 basis points), 5.93 per cent (down 43 basis points) and 6.22 per cent (down 58 basis points) respectively. The yields of 15-year bonds also fell 41 basis points to 6.95 per cent per year.

"It is still difficult for credit institutions to lend money," Bao Viet Securities analysts Ha Thi Thu Hang and Nguyen Hai Yen wrote in a report. "Amid high liquidity in the system and stable interbank interest rates, government bonds remain attractive to banks."

The government bond market in Viet Nam had an average annual growth rate of 23 per cent in the past five years, the most rapid expansion in emerging East Asia and the ASEAN+three regions, said the State Securities Commission (SSC).

SSC unveiled the growth rate at a recent conference held in Ha Noi to review the government bond market in the past five years.—VNS

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