Low rates hit Govt bond issues
HA NOI — The failure of recent auctions of Government bonds and treasury bills to attract investors has been blamed on the interest rates being offered, which are significantly less attractive than those offered by banks for deposits.
In the latest auction, which took place in late April, only VND20 billion (US$1.27 million) of VND300 billion ($19 million) worth of bonds was sold, and in the preceding auction, only 17.5 per cent of the total bond volume available was sold.
The interest rates for the bonds are 8.6 per cent per year for the 5-year term and 9.1 per cent for the 15-year term, compared with the rates of 9 per cent per year for 2-year deposits currently offered by banks.
Experts said the current two-year time frame for the adjustment of Government bond ceiling interest rates is inadequate, arguing that more frequent adjustments are necessary if the State is to raise significant funds from its bonds.
So far this year, only VND3 trillion ($190 million) worth of treasury bills and government bonds – 12 per cent of the year’s target – has been sold, at an average interest rate of 6 per cent per annum.
The Government plans to issue VND11.5 trillion ($728 million) worth of bonds and $1.3 billion worth of treasure bills this year. — VNS