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Bond demand suddenly fell to a 12-week low


With inflation returning in July, market participants have sharply increased bid rates for the 5-year term.


According to SSI Retail Research's weekly market analysis report of SSI Securities, in the week to July 28, 1977, the State Treasury (State Treasury) kept the offer volume of 3.6 Trillion bonds similar to last week but with 3 terms 5, 20 and 30 years.

However, bond demand suddenly fell sharply with the total bid volume down to 9.63 trillion, the lowest in 12 weeks. Bids for 20 and 30 year terms dropped sharply by 56% and 31% respectively compared to the most recent session, while the 5-year bid remained relatively high at 4.96 trillion registrations.

With inflation returning in July, market participants have sharply increased bid rates for the 5-year term. The lowest interest rate increased 38 basis points to 4.58% per annum, higher than the winning rate of the previous session of 4.48%. This situation has caused the State Treasury not to issue a five-year term. The two terms of 20 and 30 years are still quite favorable with the winning ratio of 85% and 98% and the interest rate is down 20 basis points and 43 points. Total state treasury has issued 2.37 trillion in these two terms.

By the end of July, the State Treasury mobilized 173.6 trillion bonds (not including social insurance in June and July), fulfilling 71% of the year plan. All terms of 7 years or more have completed the plan, and the five-year term has been issued 39%. The average term increased to 14.2 years, with winning interest rates down from 156-193 basis points over the same period in 2016.

Secondary market while reversing strongly. Yields on multiple terms increased, with two-year and three-year terms posting the sharpest increase of 24 basis points to 4.15% and 4.37%. Expectations of inflation have led to a short term rise in term yields, while the yield curve tends to decrease.

Liquidity in the secondary bond market increased sharply, total trading value of the whole market reached 58.9 trillion, up 15.8 over the previous week, of which trading transactions accounted for 51.8%, reaching 30 , 6 trillion, up 19.1%, repo transactions reached 28.4 trillion, up 12.4%.

The trading volume of foreign investors was weak, trading value fell to 2.8 trillion, only 2.4% of the market. Trading volume was quite balanced, causing the net sale of Vietnam bonds with a negligible volume of 39 billion dong.

 

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