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Government bonds not to be sold at any price
One more unsuccessful government bond bid has been reported due to the gap between the ceiling interest rate set by the Ministry of Finance and the rates offered by commercial banks.
It was quite a surprise that the government bond bid on December 11, 2008 was unsuccessful. It took place at a time when commercial banks, as they have an excess of usable capital, have been pushing up transactions of bonds in the secondary market.
Unlike previous bids, the total sum of money registered for the bid was as high as VND960bil, while only VND500bil worth of bonds were called for bid. The problem lies in the fact that the Ministry of Finance set the ceiling interest rate at 9%, well below the rate expected by commercial banks at 10-12.5% per annum.
With capital in excess, banks have tried to inject money in government bonds as a safe investment channel. In fact, though bank interest rates have been decreasing, banks still cannot push up disbursement as businesses dare not expand production in the context of low purchasing power.
According to the Ministry of Finance (MOF), the total capital raised through bond issuances in the first ten months of the year just fulfilled 52% of the plan. It is expected that the volume of capital to be mobilised this way in 2009 will be also not be overly large, as MOF will not mobilise capital at any cost.
Regarding the ceiling bond interest rate, the ministry said that it needs to consider the real demand for capital of investment projects and the disbursement rate to set up reasonable interest rates for bonds.
Nguyen Thi Hoang Lan, Deputy Director of the Hanoi Securities Trading Centre (HASTC), said that the ceiling interest rate will be adjusted to make it more flexible and fit the state budget adjustment.
DTCK
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