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Gov’t to offer $1b in US dollar bonds
The Government will issue another US$1 billion in US dollar-denominated bonds in this year, aiming to raise capital for key national projects and offset the State budget overspending, under a plan approved on Tuesday.
The issue is authorised by an earlier decision, Decision No 211/QD-TTg issued on February 13, on the issuance of foreign currency-denominated Government bonds on the domestic equity market.
Under that decision, the Government appointed the Ministry of Finance, the Ministry of Planning and Investment and the State Bank of Viet Nam to monitor the market for the most opportune times to issue bonds.
An independent economist in HCM City said that a $1 billion in Government bonds sold in US dollars would not lead to dollarisation of the domestic monetary system.
"On the other hand, the issue could possibly help balance US dollar supplies in commercial banks and in daily life," the economist said.
Early this year, the Government raised $230 million from an offer of $300 million in dollar-denominated Goverment bonds, a result viewed as only a "so-so" success in the context of market turmoil.
A bond analyst from a Ha Noi-based bank said, on condition that his name be withheld, that the successes of bond issues, whether dollar-denominated or Viet Nam dong-denominated, depended mostly on the offered coupon level.
"Of course, the market situation is another factor for the bid success. But bidders always compare bank interest rates to bonds to make a decision," he said.
John Nolan, an analyst from a HCM City fund management company, agreed that the terms of bonds were a strong factor in the success of an issue.
"From the previous issue, the bonds of terms longer than one year did not attract bidding from investors as [the term] was not relative to the yield of the bonds," Nolan said.
In the three previous bids on US dollar-denominated Government bonds, one-year bonds paid 3 per cent per year, two-year bonds 3.2 per cent, and three-year bonds 3.6 per cent.
"I think issuers will make a proper adjustment to create a success for the US dollar bond auction as this is a very attractive channel for investment, especially for overseas institutions," said Nolan. "Government bonds are a financial tool with minimum or no risk."
VNS
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