G-bond issuance in May reaches highest value in 8 months

16-Jun-2021 Intellasia | VnEconomy | 5:02 AM Print This Post

According to statistics, the issuance of government bonds (G-bonds) in May sharply increased by 68 percent compared to the previous month, reaching 44.2 trillion dong, the highest level in the past eight months.

This development was mainly due to the increase in offer volume of the State Treasury to 48 trillion dong, and the high demand for reinvestment, estimated at 33.4 trillion dong of G-bonds.

Thus, in the first five months of 2021, the State Treasury has successfully issued 109.7 trillion dong of G-bonds, completing 31.3 percent of the target in 2021.

On the contrary, it is estimated that about 102.6 trillion dong of G-bonds matured in the first five months of 2021, leading to a net issuance value of 7.1 trillion dong (it was 800 billion dong of net issuance value recorded in the same period of 2020).

It is known that due to the demand for reinvesting G-bonds of commercial banks, the system liquidity recently increased hot, surpassing 1.5 percent per annum on overnight interbank interest rates at some points of time, much higher than the previous time. However, this level soon cooled down and decreased to one percent per annum in the end of last week.

In the secondary market, the total trading value grew 7.8 percent compared to the previous month, reaching 211 trillion dong in May. In the first five months of 2021, the activities in the secondary market increased by 12.5 percent over the same period of last year.

In this market, the yields of G-bonds with terms of five years and more slightly declined, while the G-bond yields of short terms inched up in May.

As of May 31st, the G-bond yields for terms of five years and 10 years respectively reached 1.18 percent (down by five basis points) and 2.29 percent (down by 12 basis points), while the three-year bond yields rose by 12 basis points to 0.89%.

Notably, after eight consecutive months of net buying, foreign investors net sold 775 billion dong in May. However, in May 2021, foreign investors net purchased 5.9 trillion dong of G-bonds compared to the net selling of 460 billion dong in the same period of 2020.

Assessing the development of the G-bond market in general, representative of the State Treasury said that the G-bond market has given effective support to the government as well as helped diversify the safe investment portfolio for investors. This is especially meaningful in the context when the economy is facing many difficulties under the impact of the Covid-19 pandemic.

The low issuance interest rates across all terms helped save the government’s costs of capital. Notably, the average maturity of bonds issued through bidding is over 10 years, bringing the initiative and stability in the investment in developing key and long-term products of the government.

In the second quarter of 2021, the State Treasury plans to bid G-bonds via the Hanoi Stock Exchange (HNX) with a total issuance value of 100 trillion dong (including the issuance for Vietnam Social Security). The remaining offer value in June 2021 is nearly 30 trillion dong.

 

Category: Finance, Vietnam

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