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Low interest rate slows G-bond sales - 6/1/2018 8:56:12 AM
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Despite potential of expansion due to high investment demand, little capital has been mobilised from Government bonds due to interest rates below investors’ expectation.
According to the Ministry of Finance, as of May 17, 2018, the State Treasury mobilised 56.02 trillion VND from Government bonds, 20 percent of the yearly target, and equivalent to 54 percent of the amount in the same period last year and only 33.6 percent in the same time of 2016.
Meanwhile, the Hanoi Stock Exchange revealed that investors’ engagement in bids for Government bonds has increased sharply compared to 2016 and 2017.
According to Nguyen Thi Kim Oanh, President of the Vietnam Bond Market Association (VBMA), the Government bond market has high potential of development as investors’ demand remains high. 
Oanh said the problem is the difference between investors’ expectation in interest rate and issuers’ offering rate. 
The gap between interest rate in the primary market and secondary market has made investors hesitate.
At the same time, the State Treasury does not aim to sell Government bonds at all costs, but hopes to maintain a low interest rate, therefore, it has made little adjustment in the interest rates.
The Ministry of Finance reported that in the first four months of this year, total investment from the State budget, including Government bonds, was estimated at 65 trillion VND, 16.27 percent of the target assigned by the National Assembly.
Slow disbursement also led to a surplus of about 11.3 trillion VND in State budget.
Liquidity of the banking system has still been high, but not as strong as in early 2018, resulting in a rise in inter-banking interest and a reduction in demand.
Oanh asserted that if the disbursement of investment is not improved in the coming time, the success of bids in primary markets will not meet expectations.
The VBMA leader said that currently, the market is experiencing an adjustment period.
Nguyen Thi Hoang Lan, Deputy Director of the HNX said that since April, interest rates have increased, with additional 40 points for five-year term bond, 30 points for 10-year term and 15 points for 30-year term.-VNA
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