Wednesday, 09:35 07/03/2018
G-bond future contracts to be launched in Q3 2018
The Hanoi Stock Exchange (HNX) will launch the five-year government bond (G-bond) future contracts with the yield of 5 percent in the third quarter of this year, according to HNX Deputy Director Nguyen Thi Hoang Lan.
During a press conference on March 5, Lan said that HNX will also further develop the bond market in general and the corporate bond market in particular this year.
In Vietnam, the current law allows three types of derivative products -- futures contracts of shares indexes with the VN30-Index and HNX30-Index as underlying assets, and five-year Government bond future contracts.
The country’s derivatives market started official operations on August 10 last year with the VN30-Index futures contract set to launch first. The VN30-Index and HNX30-Index capture the performance of the top 30 largest stocks on the Ho Chi Minh and Hanoi stock exchanges in terms of market value and liquidity.
Derivative is a security with price that is dependent upon or derived from one or more underlying assets.
According to the Prime Minister’s direction, since the derivatives market is new and under trial, the VN30 futures contract was launched first to limit risks, while the HNX30 and G-bond futures will be introduced later.
At the meeting on March 5, HNX’s representatives also reported that the total capitalization of the G-bond market until February 28 reached more than VND1,009 trillion (US$44.44 billion), equal to 20 percent of the country’s last year GDP. The number was 6.3 times higher than that in 2009.
The State Treasury early this year issued the Letter No. 420/KBNN-QLNQ on the plan for G-bond issuance for the first quarter of 2018. Accordingly, the total expected issuance amount for the quarter is VND45 trillion, of which 10-year and 15-year bonds will account for VND11 trillion each, 30-year bonds will make up VND8 trillion and 5-year, 7-year and 20-year bonds will represent VND5 trillion each.
The National Financial Supervisory Commission forecast that the G-bond market in 2018 would see modest change thanks to the economic growth of more than 6.7 percent and inflation staying below 4 percent.
The value of G-bonds issued in 2018 is estimated at some VND180 trillion (US$7.93 billion), with the focus being on long term maturity and keeping the interest rate at low levels.
In 2017 the government approved the roadmap for the development of the bonds market by 2020 with a vision for 2030, in which the outstanding debt in the Vietnamese bond market is targeted at 45 percent of the total GDP in 2020 and some 65 percent of the GDP in 2030.
Under the plan, the outstanding debt of the Government bond, Government-guaranteed bond, and municipal bond market is aimed at some 38 percent of the total GDP in 2020 and 45 percent in 2030. The corporate bond market’s outstanding debt is expected to reach 7 percent of the GDP in 2020.
The roadmap aims for stable development, larger size, and better quality in the Vietnamese bond market, which should have more diverse products and proactively integrate into the global market as well as gradually apply international standards and practices.
For this, Vietnam is set to complete its policy framework for the bonds market, develop the primary and secondary markets, diversify investors, and facilitate intermediary institutions and market services.
Reports from the Ministry of Finance showed that G-bonds worth VND159.9 trillion ($7.04 billion) with an average maturity of 13.52 years (up 4.81 years against 2016) were issued last year.
The bonds had an average interest rate of some 6.07 percent per year, down 0.2 percentage points against 2016.
Vietnam plans to issue G-bonds worth VND45 trillion in Q1 2018
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The country’s derivatives market started official operations on August 10 last year with the VN30-Index futures contract set to launch first. The VN30-Index and HNX30-Index capture the performance of the top 30 largest stocks on the Ho Chi Minh and Hanoi stock exchanges in terms of market value and liquidity.
Derivative is a security with price that is dependent upon or derived from one or more underlying assets.
According to the Prime Minister’s direction, since the derivatives market is new and under trial, the VN30 futures contract was launched first to limit risks, while the HNX30 and G-bond futures will be introduced later.
At the meeting on March 5, HNX’s representatives also reported that the total capitalization of the G-bond market until February 28 reached more than VND1,009 trillion (US$44.44 billion), equal to 20 percent of the country’s last year GDP. The number was 6.3 times higher than that in 2009.
The State Treasury early this year issued the Letter No. 420/KBNN-QLNQ on the plan for G-bond issuance for the first quarter of 2018. Accordingly, the total expected issuance amount for the quarter is VND45 trillion, of which 10-year and 15-year bonds will account for VND11 trillion each, 30-year bonds will make up VND8 trillion and 5-year, 7-year and 20-year bonds will represent VND5 trillion each.
The National Financial Supervisory Commission forecast that the G-bond market in 2018 would see modest change thanks to the economic growth of more than 6.7 percent and inflation staying below 4 percent.
The value of G-bonds issued in 2018 is estimated at some VND180 trillion (US$7.93 billion), with the focus being on long term maturity and keeping the interest rate at low levels.
In 2017 the government approved the roadmap for the development of the bonds market by 2020 with a vision for 2030, in which the outstanding debt in the Vietnamese bond market is targeted at 45 percent of the total GDP in 2020 and some 65 percent of the GDP in 2030.
Under the plan, the outstanding debt of the Government bond, Government-guaranteed bond, and municipal bond market is aimed at some 38 percent of the total GDP in 2020 and 45 percent in 2030. The corporate bond market’s outstanding debt is expected to reach 7 percent of the GDP in 2020.
The roadmap aims for stable development, larger size, and better quality in the Vietnamese bond market, which should have more diverse products and proactively integrate into the global market as well as gradually apply international standards and practices.
For this, Vietnam is set to complete its policy framework for the bonds market, develop the primary and secondary markets, diversify investors, and facilitate intermediary institutions and market services.
Reports from the Ministry of Finance showed that G-bonds worth VND159.9 trillion ($7.04 billion) with an average maturity of 13.52 years (up 4.81 years against 2016) were issued last year.
The bonds had an average interest rate of some 6.07 percent per year, down 0.2 percentage points against 2016.
