Finance Minister: Vietnam Govt Should Re-consider Yields for g-Bond Issues

Finance Minister Vu Van Ninh has recently told state media that the government should re-consider interest rates of loans on the domestic monetary market in order to set coupons of government bonds “at moderately appropriate levels” to ensure success of the next issuances.

 

The dilemma that the government is facing with is how to fix yields of g-bonds at “moderately appropriate levels” because it needs funds to continue its stimulus packages amid the global economic downturn, Minister Ninh said.

 

Most of the g-bonds issues were not as successful as expected as yields offered by the government were not attractive, analysts said.

 

In the first months of this year so far, the government had sold only VND7.5 trillion of debts, they said.

 

The National Assembly, the country’s top legislative body, has recently passed the government’s plans to issue an additional VND20 trillion worth of g-bonds, to raise the total of g-bonds to VND64 trillion for this year, more doubling that of 2008.

 

The Ministry of Planning and Investment has just completed a plan to allocate VND20 trillion worth of g-bonds that the government expects to borrow from the domestic market.

 

Meanwhile, the levels of absorbability of g-bonds are at very restrict levels because of problematic site clearance of g-bond-used investment projects.

 

The government said that only VND9.826 trillion (US$579.6 million) worth of g-bonds was spent in the first half of this year, meeting only 27.3 per cent of this year’s initial target of VND36 trillion.