Treasury to issue US$11.1bn in bonds, less than last year

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G-bonds will be divided into different categories, with maturity of up to 30 years, the treasury said at a recent meeting organised for market members by the Ha Noi Stock Exchange (HNX).

Of the total bond volume issued this year, 20 per cent will be one to three-year bonds, 60 per cent will be five to 10-year bonds, and the rest will be bonds with a maturity of more than 15 years.

In the first quarter of 2017 alone, the State Treasury will issue bonds worth VND65 trillion.

The State Treasury said it will mobilise VND3 trillion in three-year bonds, VND30 trillion in five-year bonds, VND10 trillion in seven-year bonds, VND8 trillion in 15-year bonds and VND6 trillion in 30-year bonds.

During the issuance process, the State Treasury may adjust the volume of bonds and their maturity dates in line with market conditions, the agency said.

To achieve this target, the Ministry of Finance will propose some regulations to the Prime Minister, such as a development plan for the G-bond market in the period 2017-20, and an amended decree on corporate bond issuance.

To improve the attractiveness of Government bonds, the Ministry of Finance said it would implement a pilot project of issuing floating rate G-bonds in the primary market from the second quarter of 2017.

In the secondary market, the bond derivatives market will be launched in the first quarter, and settlement function will be transferred to the central bank, the ministry said.

For the HNX, the northern market regulator will diversify products, increase trading liquidity and improve the transparency of market information for the bond market.

For the G-bond market, the HNX will work with local authorities to issue green local government bonds and prepare conditions to add the State Treasury as a member of the bond market.

For the corporate bond market, the HNX will complete the corporate bond market development plan at the request of the State Securities Commission, complete the draft circular on corporate bond issuance and develop the portal of corporate bonds.

In 2016, the total value of Government bonds mobilised on the Ha Noi Stock Exchange was VND316.73 trillion, an increase of 26.85 per cent from 2015.

Foreign buying was also positive in 2016, contributing to the rise of trading value. According to the HNX, foreign investors bought more bonds compared to the previous year.

Total market capitalisation of bonds in 2016 increased 23.5 per cent year on year, and 65.82 per cent from 2013, to VND930.53 trillion. The average value of each bond note rose 23.5 per cent from 2015 to VND1.955 trillion.

The State Treasury reported that the total value of the secondary G-bond market last year increased by 1.4 times the figure in 2015 to VND281.75 trillion, with all G-bond notes being sold on the HNX to make sure the sales were transparent and fair to every investor.

The ratio of foreign investors that made investment in G-bonds increased by 8.35 per cent in 2015 to 12.38 per cent in 2016; the ratio of finance-insurance companies and funds making investments in G-bonds rose by 20.13 per cent; and the ratio of commercial banks involved in G-bond issuance fell to 51.7 per cent.

Trading on the primary G-bond market was positive in 2016, with an average trading value in each session of VND6.35 trillion, higher than 2015. It peaked on June 28, 2016 at VND14.58 trillion.