Vnd50tln worth of government bonds to mature this year

Commercial banks have been actively purchasing bonds as more than VND50 trillion worth of government securities will mature by the end of this year, the state-run Banking Times reported, citing its private sources.

According to market insiders, the success of these recent bond auctions was largely due to investor expectations of lower inflation, forecast to be around 10 per cent this year, as well as a reduction in bank interest rates. Some major banks have already announced cuts in lending rates, including Vietcombank, the Bank for Investment and Development of Viet Nam and Vietinbank.

Besides, large commercial banks with ample liquidity switch to invest in bonds, which they can use as collaterals to access funds from the State Bank of Vietnam (SBV) in case of unfavorable conditions.

Yields on government bonds have dropped below market expectations, said Ngo Minh Hoa, an analyst at Bao Viet Securities Company. Banks obviously show interests in government debts, which are considered as a good investment option for the time being, she said, adding that domestic lenders hardly have any better investment choices.

Even mid-sized banks started to invest in bonds, with the number of participants in the bond auctions rising from two to five bidders in previous months to nearly 20 now, Hoa commented.

Year to date, the State Treasury has sold in total VND17.78 trillion worth of government debts with fixings falling by each trading session hitting 11-month low in the latest auction held on February 23.
Source Sophie/ StoxPlus

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

Posted by VBN on Feb 24 2012. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry