Investor attention drawn to Government bonds

Investors have shown a growing interest in Government bonds since late May, according to bidding results posted by the Ha Noi Stock Exchange.

“The success could be attributed to the fact that banks were nearing their credit limitation of 20 per cent,” said deputy general director Luu Nguyen Chi Nhan of Sai Gon – Ha Noi Fund Management Company as quoted by the Dau Tu Chung Khoan (Securities Investment).

Also, gold and foreign currency were not as profitable as before which led banks to buy Government bonds for less risk and reasonable interest rates, he said.

Banks were showing a high demand for Government bonds as nearly VND4.5 trillion (US$214.3 million) in bonds would reach their maturity dates in June, said analysts at Bao Viet Securities Co.

About VND2.5 trillion in bonds was due in May. The abundance of capital in large banks increased the supply of funds on the interbank market which in turn caused interest rates to fall, they said.

Nguyen Thi Hoang Lan, deputy director of the Ha Noi Stock Exchange, said recent success signalled greater economic indicators.

“The northern exchange is actively co-ordinating with the Securities Depository and the State Treasury to restructure the bond market,” she said.

“We will convert a variety of bonds with different maturities to the same maturity. We expect to implement this in the third quarter of this year.”

However, other securities analysts said they were not certain about a decrease in the lending rates because inflation remained high.

The State Treasury on Wednesday successfully tendered VND4.9 trillion of its bonds out of the VND5 trillion offered.

The interest rates for 3-year and 5-year bonds fell 0.4 and 0.78 per cent from last week, and 0.9-1 per cent compared to a bidding which took place on May 26. — VNS

Tags: Vietnam banking industry, Vietnam bonds, Vietnam finance, Vietnam financial