The State Treasury of Vietnam raised nearly VND324 trillion (US$14.04 billion) through Government bonds (G-bonds) auctions at the Hanoi Stock Exchange (HNX) in 2020, 8% above the year’s plan.

Vietnam strives to have its government bond included in global recognized bond indices in 2021. Photo: Pham Hung.

Last December, the HNX organized 25 government bonds auctions and received VND53 trillion (US$2.3 billion), up 43.6% month-on-month.

Successful bidders for G-bonds from 10 to 30-year term, however, would have to settle with interest rates of 0.1 – 0.2 percentage points lower than in previous month.

On the secondary market, the total volume of G-bonds sold by the outright method reached over 1.93 billion worth VND213.7 trillion (US$9.26 billion), up 30.38% in value from a month earlier. 

Trading volume through repurchase agreements (repos) was more than one billion bonds valued at VND109 trillion ($4.72 billion), increasing 43.66% in value from November and accounting for 33.76% of total transaction value in the market.

Foreign investors did not participate in repos transaction last month, but bought more than VND3.62 trillion ($157 million) worth of G-bonds via outright and sold of VND2.41 trillion ($104.5 million). This resulted in foreign investors being net buyer of VND1.21 trillion ($52.47 million), the largest amount in 2020.

As a result, foreign investors net bought VND3.95 trillion ($171.28 million) of G-bonds in 2020.

The average transaction amount in the G-bond market in 2020 rose by 13.73% year-on-year to VND10.27 trillion ($445.42 million), showcasing “improvements in size and liquidity of the market,” noted the HNX.

As of December 31, 2020, the total value of G-bonds reached more than VND1,350 trillion ($58.55 billion), up 17.39% year-on-year.

Vietnamese G-bond among global recognized bond indices

Head of the Department of Banking and Financial Institutions under the Ministry of Finance (MoF) Phan Thi Thu Hien said for the country’s next five years of 2021-25, Vietnam will need huge capital for development, in which the G-bond is an essential part for the development of bond and financial markets.

“In 2021, Vietnam strives to have its G-bond included in global recognized bond indices such as JP Morgan, Bloomberg Barclays, Citi World Government, aiming to attract foreign investors to Vietnam’s bond market,” Mrs. Hien said.

Under the bond market development roadmap during 2017-20, with vision toward 2030, Vietnam aims for the average increase of trading volume of G-bonds, government-guaranteed bonds and municipal bonds per session at 1% and 2% of the outstanding balance of listed bonds by 2020 and 2030, respectively.

The outstanding balance of the bond market will reach around 65% of GDP by 2030, with the outstanding balance of the market of government bonds, government-guaranteed bonds and municipal bonds to reach about 45% of GDP by 2030, and that of the market of corporate bonds to reach about 20% of GDP by 2030.