Asia Times Online :: Southeast Asia news and business from Indonesia, Philippines, Thailand, Malaysia and Vietnam

Southeast Asia

May 13, 2005

Low rates hit Vietnamese bond issues

HANOI - 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% of the total bond volume available was sold.

The interest rates for the bonds are 8.6% per year for the 5-year term and 9.1% for the 15-year term, compared with the rates of 9% 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 Vietnam 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% of the year's target - has been sold, at an average interest rate of 6% per annum.

The government plans to issue VND11.5 trillion ($728 million) worth of bonds and $1.3 billion worth of treasury bills this year.

(Asia Times Online/VNA)

Head Office: Rm 202, Hau Fook Mansion, No. 8 Hau Fook St., Kowloon, Hong Kong
Thailand Bureau: 11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110