VIETNAM BOND MARKET ASSOCIATION
VIETNAM BOND MARKET REPORT July – 2014 In the primary market, VND22,950 billion worth of Government bonds was raised via auctions out of the VND23,000 billion offered. The winning/offering ratio this month rose to 99.8% from 83.3% last month. In this August, 3 Treasury bills will come to maturity with the total face value of VND2,570 billion. Regarding the corporate bond market, CII and SFI has converted their bonds into common stocks in July, Ocean Group cancelled the plan to issue VND980 billion in the 2 nd quarter of 2014, NBB and NLG planned to issue VND210 billion and VND350 billion, respectively, in 2014. In the secondary market, the total bond trading volume in July was more than VND82,858 billion, up 8% m-o-m and reached the highest level this year so far. Outright trading volume was VND 61,504 billion, accounting for 74.22% of total trading. Government bonds trading volume was VND65,611 billion, accounted for 79.19% of total trading. The market share of Government bonds in total bond outstanding value is 74.07% or VND456,745 billion, comes next is Government-guaranteed bond with 23.79% or VND146,724 billion and the remaining 2.13% is local government bond. Data from the VBMA Market Makers Chatroom indicated that Government bond yield fixing decreased across all tenors 1, 2, 3 and 5 years compared to June, the decreases range from 0.5 bps to 51 bps.
VIETNAM BOND MARKET REPORT July -2014
PRIMARY MARKET The State Treasury raised VND22,950 billion via bond auctions and VND3,000 billion via bills auctions. The winning/offering rate continued to increase compared to June. In July, there were 4 government bond auctions in the primary market. The offering and winning volume were VND23,000 billion and VND22,950 billion, respectively compared to VND24,000 billion and VND20,000 billion in June. The winning interest rate decreased rapidly across all four auctions. There were also 2 Treasury bill auctions in July and VND3,000 billion was raised. Besides, one Government-guaranteed bond auction was also held with VND1,000 billion offered and VND250 billion raised. In the first 7 months of 2014, the State Treasury raised VND139,654 billion via bonds auctions and VND24,502 billion via bills auctions, totalling VND164,156 billion. Table 1: Bond and bill auctions result in July 2014:
Tenors
Offering volume (VND bio)
Winning volume (VND bio)
Winning interest rate (%)
Up(+)/Down(-) compared to the previous auction
TD1417077
3 Years
2,000
2,000
6.00
-10
TD1419085
5 Years
2,000
2,000
7.04
-11
3
11-July-2014 TD1416066
2 Years
1,000
1,000
5.37
n/a
4
11-July-2014 TD1417079
3 Years
2,000
1,950
5.89
-11
5
11-July-2014 TD1419087
5 Years
3,000
3,000
6.94
-10
6
17-July-2014 TD1417078
3 Years
2,000
2,000
5.79
-10
7
17-July-2014 TD1419086
5 Years
3,000
3,000
6.83
-11
8
29-July-2014 TD1416066
2 Years
1,000
1,000
5.25
n/a
9
29-July-2014 TD1417078
3 Years
2,000
2,000
5.68
-11
10
29-July-2014 TD1419088
5 Years
3,000
3,000
6.68
-15
11
29-July-2014 TD1424092
10 Years
2,000
2,000
8.48
n/a
12
18-July-2014 BVBS14023
3 Years
500
250
6.2
n/a
13
18-July-2014 BVBS14048
5 Years
500
0 Winning volume (VND bio)
Winning interest rate (%)
Up(+)/Down(-) compared to the previous auction
No.
Date of bid openning
Bond code
1
3-July-2014
2
3-July-2014
n/a
No.
Date of bid openning
Bill code
Tenors
Offering volume (VND bio)
1
7-July-2014
TPKB14029
52 weeks
2,000
2,000
4.80
-5
2
21-July-2014
TPKB14030
52 weeks
1,000
1,000
4.65
-15 Source: HNX, VBMA
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VIETNAM BOND MARKET REPORT July -2014
Offering volume in July decreased 4.2% m-o-m while at the same time the winning volume was up 14.8% m-o-m, thus the winning/offering ratio went up to 99.8% from 83.3%. Figure 1: Offering and winning volume of Government bond in the first 7 months of 2014. 45,000 40,000 35,000
120.0%
99.8% 94.3%
100.0%
83.3%
85.7%
30,000
80.0%
25,000
67.6%
60.0%
53.6%
20,000
15,000
40.0%
39.0%
10,000
20.0%
5,000 0
0.0% Jan
Feb
Winning volume
March
April
May
Offering volume
June
July
Winning/Offering volume
Source: HNX, VBMA
The winning/offering for Treasury bills experienced a decreasing trend in May and June but increased in July. Figure 2: Offering and winning volume of Treasury bill in the first 7 months of 2014. 7,000 6,000
120.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
5,000
80.0%
62.9%
4,000
60.0% 3,000
49.6%
40.0%
2,000
20.0%
1,000 0
0.0%
January February
March
April
Offering amount (VND bio)
May
June
July
Winning amount (VND bio)
Winning/Offering ratio
Source: HNX, VBMA
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VIETNAM BOND MARKET REPORT July -2014
Table 2: Bond auctions result in July, classified by tenors. Tenors
Offering volume (VND bio)
Winning volume (VND bio)
Winning/Offering (VND bio)
2 Years
2,000
2,000
100.0%
3 Years
8,000
7,950
99.4%
5 Years
11,000
11,000
100.0%
10 Years
2,000
2,000
100.0%
Total
23,000
22,950
99.8%
Source: HNX, VBMA
Government bond and Treasury bill payment calendar in August 2014. In this August, there will be 3 Treasury bills coming to maturity with the total face value of VND2,570 billion. Table 3: Government bond and Treasury bill payment calendar in August 2014. Tenor (days)
Interst rate (%/year)
Maturity date
580
364
6.25%
19-Aug-2014
VNTPKB130408
1,000
364
6.25%
12-Aug-2014
TPKB13039
VNTPKB130390
990
364
6.40%
05-Aug-2014
TD1315007
VNTD13150071
0
392.74
2 yrs
7.3%
31-Aug-2015
2,570
392.74
No.
Bond/Bill code
ISIN code
Principal payment (VND bio)
1
TPKB13041
VNTPKB130416
2
TPKB13040
3 4
Total
Interest payment (VND bio)
Source: HNX, VBMA
Corporate bond CII: converted bonds into 2,665,500 shares of stock. Ho Chi Minh City Infrastructure Investment JSC (CII) issued VND71.079 billion worth of 5-year convertible bond on January 27, 2011. In the conversion of this July 28, 26,655 bonds (with the face value of VND26.655 billion) was converted into 2,655,550 shares of stock, accounting for 37.5% of total issued value.
SFI: converted bonds into 1,178,000 shares of stock. The Sea & Air Freight International Company (SFI) issued VND20,000 billion worth of 1-year convertible bond on July 04, 2013. In the conversion of this July 15, the conversion ratio was 1:5.89 and 1,178,000 shares of stock was converted from bonds.
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VIETNAM BOND MARKET REPORT July -2014
Ocean Group: cancelled the plan to issue VND980 billion worth of bond. The resolution of Ocean Group (OGC) Board of Director on July 11, 2014 stated that the company had cancelled the issance of VND980 billion worth of corporate bond. According to the plan approved earlier by the Board in late March 2014, OGC would issued 3-year bond to about less than 100 investors, with the face value of VND1 billion/bond.
NBB: approved the plan to issue VND210 billion (or USD10 million) worth of convertible bond to raise charter capital. According to the approved plan, Nam Bay Bay Investment Corporation (NBB) would issue USD10 million or VND210 billion worth convertible bond with the face value of USD100,000/bond or VND 1 million/bond. The bond would be unsecured, have 5-year tenor, coupon rate from 5% to 7.5%/year, paid annually. The conversion time could be negotiated, the conversion price would equal to the average price of NBB stock in the latest 30 trading day minus 10% or 20% or be according to an agreed conversion price.
NLG: plan to issue VND350 billion worth of corporate bond Nam Long Investment Corporation (NLG) Board of Director approved the plan to issue VND350 billion worth of 3-year convertible bond. The coupon would be paid semi-annually with the interest rate of 10%/year in the first period. The rate then will be floating, adjusted every 6 months and equal to the average 12-month term deposit rates of 4 banks: Oceanbank, Vietinbank, BIDV and Vietcombank at the day of adjustment plus 2.5%/year (the expected interest rate would be about 10%/year). One year after being issued, NLG can buy back part of or all of the bonds at the face value at the day of interest rate adjustment (on 30-day notice), free of charge. Bond holders can sell the bonds back to NLG 1.5 years after issuance date at face value: after 1.5 years – VND200 billion, after 2.5 years – VND100 billion, 3 years – VND50 billion.
Vinacomin: plan to issue VND3,000 billion worth of long-term corporate bond. Vietnam National Coal – Mineral Corporation announced its plan to issue VND3,000 billion worth of 5-year bond in 2014. The amount of bond would be 3,000 with the face value of VND1 billion/bond. The bond started to be issued on June 27, 2014 and would come to maturity on June 27, 2019. In the first period, the coupon rate would be 9.8%/year. From the second period, the coupon rate would equal to the average 12-month deposit rate of 4 big banks in Vietnam plus a 2.75%/year spread. The coupon rate would be adjusted every 6 months, the principal would be paid in maturity.
BIDV: cancelled the listing of VND1,360 billion worth of long-term bond. Bank of Investment & Development of Vietnam (BIDV) decided to cancel the listing of VND1,362 billion worth of long-term bond issued on July 31, 2009 and would buy back the bond from July 31 to August 01, 2014. BIDV issued 136.2 million bonds with the face value of VND100,000/bond in 2009 and listed the bonds in Hanoi Stock Exchange on July 14, 2014. The interest and principal payment would be paid in full to bond holder on July 31. The bond would no longer be traded from the day BIDV bought back the bonds and made full payment to its holders.
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VIETNAM BOND MARKET REPORT July -2014
SECONDARY MARKET The total trading volume in July was VND82,858 billion. In the secondary market, the total bond trading volume in July was VND82,858 billion, up 8% m-o-m and reached the highest level this year so far. Government bonds trading volume was VND61,504 billion, accounted for 74.2% of the total trading volume; outright trading volume was VND65,611 billion, accounted for 79.2%. Table 4: Trading volume in July 2014 (VND bio). Bond types
Outright
Local Government bond Government bond Governmentguaranteed bond Total
Repos
Value
Market share
Value
Market share
4,551
7.40%
0
0.00%
51,041
82.99%
14,570
68.23%
5,911
9.61%
6,784
31.77%
61,504
100.00%
21,354
100.00%
Source: HNX, VBMA Figure 3: Trading value over the past 7 months (VND bio). 90,000 82,858
80,000
76,750
70,000 60,519
60,000 50,000 44,827
40,000 30,000
58,572 Outright
46,476
Repo 32,819
Total
20,000 10,000
0
Source: HNX, VBMA
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VIETNAM BOND MARKET REPORT July -2014
Classified by remaining tenor, the majority (nearly than 75%) of the outright trading was that of bonds with times to maturity of 3 years or less. Table 5: Outright bond trading in July 2014, classified by remaining tenors. No. 1 2 3 4 5 6 7 8 9 10 11
Remaining tenor 3 Months 6 Months 9 Months 12 Months 2 Years 3 Years 3 - 5 Years 5 Years 5 - 7 Years 7 - 10 Years 10 Years Total
Trading volume
Trading value (VND bio)
4,700,000 3,200,000 10,680,000 83,500,000 160,653,571 156,277,759 34,544,000 103,085,453 7,230,000 2,000,000 15,310,000 581,180,783
512 346 1,130 9,032 16,876 16,552 3,758 10,665 842 209 1,581 61,504
Source: HNX, VBMA
Table 6: Bonds with largest volume of trading in July 2014. No. 1 2 3 4 5
Bond Code TD1417077 TD1419087 TD1416065 TD1419085 TD1417076
Issuance date
Initial tenors
Trading value (VND bio)
15/05/2014 15/07/2014 15/04/2014 15/05/2014 15/04/2014 Total
3 years 5 years 2 years 5 years 3 years
3,825 2,564 2,479 2,359 2,188 13,414
Source: HNX, VBMA The total trading value of the above 5 bonds accounted for 22% of all bonds in July.
The total trading volume of Treasury bills rose to VND1,026 billion. Total Treasury bill trading value in July was VND2,483 billion, 2.42 times higher than that in June. Outright trading volume and repo trading volume roughly equal to each other, about VND1,240 billion each.
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VIETNAM BOND MARKET REPORT July -2014
Table 7: Treasury bills trading in July 2014. No. 1 2
No. 1 2 3 4
Repo terms 30 days 61 days Sub-total
Bill code TPKB14019 TPKB14028 TPKB14029 TPKB14030 Sub-total Grand-total
Trading volume
Trading value (VND billion)
3,000,000 10,180,000 13,180,000
283 958 1,241
Trading volume
Trading value (VND billion)
5,000,000 2,000,000 5,000,000 900,000 12,900,000 26,080,000
486 192 478 86 1,242 2,483
Source: HNX, VBMA
Government bonds account for the large majority of total bond outstanding. The market share of Government bonds in total bond outstanding value is 74.07% or VND456,745 billion, comes next is Government-guaranteed bond with 23.79% or VND146,724 billion and the remaining 2.13% is local government bond. Table 4: Bond outstanding market share at end of July 2014:
2.13% 23.79% Government bond
74.07%
Gov'-guaranteed bond Local Gov' bond
Source: HNX, VBMA
Movements of VBMA’s Government Bond Yield Fixing in July. Based on the figure from VBMA’s Market Makers Chatroom, government bond yield fixing at the end of July 2014 decreased across all tenors 1, 2, 3 and 5 years compared to June, the decreases range from 0.5 bps to 51 bps; specifically, 1-year up 8 bps, 2-year down 23 bps, 3-year down 13 bps, 5-year down 9 bps.
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VIETNAM BOND MARKET REPORT July -2014
Figure 5: VBMA Government Bond Yield Fixing Curve on the last trading day of May, June and July 2014.
7.000%
6.500%
July
6.000%
June May 5.500%
5.000%
4.500%
1y
2y
3y
5y
Source: VBMA Figure 6: Movement of VBMA Gov’ Bond yield fixing in the first 7 months of 2014. 8.4% 7.9% 7.4% 6.9% 1y 6.4%
2y
5.9%
3y
5.4%
5y
4.9% 4.4%
Source: VBMA
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VIETNAM BOND MARKET REPORT July -2014
Thank you for reading VBMA’s March 2014 Bond Market Report. For more information, please contact: VIETNAM BOND MARKET ASSOCIATION 14th Floor, Tower A Vincom, 19 Ba Trieu Str.,Hai Ba Trung Distr., Ha Noi Tel: (84) 4 3974 8781 Fax: (84) 4 3974 8782 Website: www.vbma.org.vn
Disclaimer: The information and opinions in this report are those of Vietnam Bond Market Association (VBMA) research activity. VBMA does not make any representation or warranty, express or implied, as to the fairness, accuracy, or completeness. While all reasonable care has no representation as to its accuracy or completeness and it should not be relied upon as such. VBMA accepts no liability whatsoever for any loss arising from use of this report or its contents. This report is being supplied solely for informational purposes and may not be reproduced, distributed or published by recipient for any purpose.
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