REVIEW
of
FINANCE -
Feb. 2018
31
Ministry of Finance issued 100% the government
bonds with a term of 5 years or more, exceeding
70% of the target of the budget approved
by the National Assembly, in which, 55% of
maturity issued with a term of 10 years or more.
Accordingly, the average term issue of the
government bonds issuance in 2017 was 12.52
years, reached a record level ( 2016 is 8.71 years).
Mobilizing via long-term government bonds
contributed to prolong the remaining maturity,
ensuring the sustainability of debt portfolio of
the government bonds in line with the policies
of the Party, the National Assembly and the
Government on budget restructure and public
debt.
In term of interest rate issue: Interest rate
issue of the government bonds was operated
in accordance with market supply and demand
and monetary market activities. Accordingly,
the interest rate issue in 2017 decreased in all
terms, the average decline from 0.6% to 1.8%
compared to the end of 2016, thereby saving the
cost of mobilizing capital for the state budget.
While the term issue of the government bonds
hit a record high, the interest rate issue in 2017
reached the lowest level ever (the average
interest rate issue was 6.07%, down 0.4% from
2016, down 0.19% from 2015). Accordingly,
it saved the cost of mobilizing capital for the
state budget and contributed to restructure
the list of government bonds in a sustainable
manner in accordance with the guidelines of the
Party, National Assembly and Government on
restructuring budget and public debt.
PROSPECTS OF THE GOVERNMENT
BONDMARKET IN2018
PHAM THI THANH TAM
- Department of Finance - Banking (Ministry of Finance) *
In 2017, the bond market were stable and developed in terms of size and liquidity, creating advantageous
condition for the Government, Bank for Social Policies, local governments and enterprises to mobilize
capital with reasonable charge. However, in general, the size of the government bond market is still small,
the investor structure needs to continue to improve; the liquidity of the secondary market of government
bonds at certain times is limited etc.
Key words: Bond market, government bonds, interest rate, investors
Received: December 22
nd
, 2017
Revised: January 4
th
, 2018
Accepted for publication: January 5
th
, 2018
2017 - Year of Success for the government
bond market
In 2017, the bond market were stable and
developed in terms of size and liquidity,
creating advantageous condition for the
Government, Bank for Social Policies, local
governments and enterprises to mobilize capital
with reasonable charge. It could be said that
2017 was continuously successful year for the
government bonds market, the results achieved
as follows:
Firstly,
in the size of the bond market:
Total outstanding debt of the bond market
in 1977 was 37.45% of GDP, in which the
outstanding debt of the government bonds
reached 27.4% of GDP, the outstanding debt of
corporate bonds was about 6.19% of GDP, the
outstanding debt of Government-guaranteed
bonds was 3.31% of GDP and outstanding debt
of local government bonds was 0.55% of GDP.
Secondly,
in terms of volume, maturity and
cost of capital mobilization:
In terms of volume issue: The Ministry of
Finance completed the plan to mobilize capital
through the government bonds for the whole
year with a mobilized capital of VND 244,221
billion, down 21.8% against 2016 (including
VND 159,921 billion issued via bid, VND 84,300
billion issued for the social insurance).
In term of maturity issue: In 2017, the
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