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Finance ministry to ease G-bond rules

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The Ministry of Finance will streamline regulations on Government bonds (G-bonds) issuance and simplify procedures for granting transaction codes to attract foreign investments in the country’s G-bond market, officials said.

Investors bought more than VNĐ1.5 trillion (US$65.79 million) in G-bonds in the primary market in the first five months of this year. — Photo


Phan Thị Thu Hiền, director of the Department of Banking and Financial Institutions under the Ministry of Finance, said the participation of foreign investors in the country’s G-bond market increased in 2017 compared to 2015 figures. Foreign investors held 5 per cent of the country’s total G-bonds at the end of 2017 against 4.5 per cent at the end of 2015.

Data from the Hà Nội Stock Exchange (HNX), which organises G-bond auctions, also showed that foreign investors have been net buyers in the country’s G-bond market for the last two and a half years.

Investors bought more than VNĐ1.5 trillion (US$65.79 million) in G-bonds in the primary market in the first five months of this year. The value in the primary market for 2016 and 2017 stood at VNĐ20.8 trillion and VNĐ10.3 trillion, respectively.    

They also spent nearly VNĐ3 trillion for G-bonds in the secondary market in the first five months of 2018, compared to VNĐ12.6 trillion and VNĐ20.5 trillion in 2016 and 2017, respectively.

Chairwoman of the Việt Nam Bond Market Association Nguyễn Thị Kim Oanh said net purchases made by foreign investors of Vietnamese G-bonds are proof that their confidence in the market has gradually improved.

However, Nguyễn Thị Hoàng Lan, HNX deputy general director, said the proportion of foreign investors participating in the G-bond market has remained low, with their buying value accounting for only 5.3 per cent of the total G-bond issue value in the primary market and 6.1 per cent in the secondary market last year.

Lan said this proportion can be increased by requiring competent State agencies to start considering the interests of foreign investors to be able to offer incentives and ease the influx of investments.

Lan also said the country’s macro economic policies should be kept stable and consistent as foreign investors often look at macro economic indicators to decide whether to invest.

"The health of the economy is always a top priority for foreign investors when considering whether to purchase national bonds," she said.

According to the HNX, G-bonds worth over VNĐ56 trillion have been successfully issued so far this year.

In May alone, VNĐ11.17 trillion was raised in 20 auctions, up 45.8 per cent from the previous month. 

Of which, five-year bonds offer an annual interest rate of 2.97-3 per cent, while bonds with 10-year, 15-year and 20-year maturity periods offering interest rates of 4.15 to 4.26 per cent, 4.5 to 4.6 per cent, and 5.14 per cent, respectively. Compared to the previous month, interest rates on 5-year, 10-year, 15-year, and 20-year bonds were up 0.03, 0.16, 0.13 and 0.02 percentage points, respectively. 

The Government plans to issue G-bonds worth VNĐ200 trillion this year, with the focus being on long term maturity and keeping the interest rate at low levels.


Source: VNS

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