Report from 5/5 – 17/5/2012
Tran Thi Thanh Thao
Research Analyst
T: +84 4 44568668
E:Thao.TranThiThanh@tls.vn
MONEY MARKET
INTEREST RATES
The SBV’s new rules in April aiming at increasing credit growth have not showed great impacts on
the market. Commercial banks still restrained their lending in both market one and two due to
existing sour debts. Four month credit growth increased by -1.7% in comparison to the end of
2011, much lower than the same figure last year at 5.29%. Thus, abundant liquidity in banking
system resulted in extremely low interbank interest rates for years. The rates stood at 2.5%-3% for
the ON, 3%-3.5% for the one week and 5%-5.5% for the one month. As a consequence of
persistent tight monetary policy, a large number of firms went bankrupt or shrank business size and
therefore credit may not increase sharply if lending rates do not fall rapidly.
The YoY inflation is expected to drop dramatically to 8.5% in May (MBS’ Vietnam Outlook), creating
a chance for the SBV to reduce mobilization interest rate to around 10-11% next month. However,
the rate is not likely to decrease further because inflation mostly reaches the target at 8-9% this
year.
Chart 1: Interbank interest rates in VND (%)
17
15
13
11
9
7
5
3
1
O/N
Abbreviations
1W
2W
1M
Source: MB
CDS: Credit Default Swap
HNX: Hanoi Stock Exchange
Move: Ministry of Finance
NDF: Non-deliverable forward
VND/USD EXCHANGE RATE
OMO: Open Market Operations
ON: Overnight
The VND/USD rate remained stable during the first half of May. After the Circular No. 07 and No.03
SBV: State Bank of Vietnam
of the SBV took effects, unofficial exchange rate climbed by 20 bps over the average rate last
ST: State Treasury
MBS: MB Securities
USD: United States dollar
VCB: Vietcombank
month. Currently, the official and unofficial VND/USD rates stood at about 20,845 and 20,850
respectively. Thanks to positive news of low trade deficit and increasing FDI in the first four
months, we believe that there will be not much pressure on exchange rates in coming time.
VDB: Vietnam Development Bank
VGB: Vietnam Government Bond
VNBPS: Vietnam bank for Social
Policies
VND: Vietnam Dong
1
MBS Vietnam: 98 Nguy Nhu Kon Tum,
Thanh Xuan, Hanoi, Vietnam
Website: www.tls.vn
Bloomberg : TLSV<GO>
Sales & Client Trading
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Chart 2: VND/USD exchange rate
21400
21300
21200
21100
21000
20900
20800
20700
20600
3-Jan
SBV
3-Feb
VCB bid
3-Mar
3-Apr
VCB ask
3-May
Unofficial
Source: MB, MBS
OPEN MARKET OPERATION
From March 15th to May 16nd, the SBV already issued VND95.8 trillion of Treasury bills. In which,
VND25.5 trillion of bills matured. The number of bill auctions was also decreased to only one time
per week on Wednesday. This implied that monetary policy is being loosen to encourage a strong
cut in interest rates, curing firms from temporary lack of capital.
In the first half of May, the SBV net injected about VN 261 billion via OMO after netwithdrawing for
a long time since February. Decreasing bid to cover ratio (about 27%) showed banks’ low demand
for borrowing as liquidity remained high and OMO rate was higher than interbank rates.
Chart 3: OMO net injection (trillion VND)
60
200%
180%
40
160%
140%
20
120%
-20
100%
6-Jan
13-Jan
20-Jan
27-Jan
3-Feb
10-Feb
17-Feb
24-Feb
2-Mar
9-Mar
16-Mar
23-Mar
30-Mar
6-Apr
13-Apr
20-Apr
27-Apr
4-May
11-May
0
-40
80%
60%
40%
20%
-60
0%
Net injection
Bid to cover ratio
Source: MB & Bloomberg
BOND MARKET
The bond market in May kept attracting investors as expectation. Auction on May 11th issued about
VND 7 trillion of VGBs successfully including 2, 3 and 5 year bonds with winning rate of 100%. Bond
yields of 2, 3 and 5 year bond decreased by about 140 bps to around 8.95%-9.45%. Besides,
VNBPS and VDB also issued approximately VND 250 billion and VND 1.4 trillion of guaranteed bonds
respectively in May. Demand for VGBs increased strongly this month because banks are abundant of
VND while issued number of Treasury bills declines and interbank interest rates go down
dramatically. Thanks to high banking liquidity, we believed that the next VGBs auction will continue
2
MBS Vietnam: 98 Nguy Nhu Kon Tum,
Thanh Xuan, Hanoi, Vietnam
Website: www.tls.vn
Bloomberg : TLSV<GO>
Sales & Client Trading
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E: Phuong.TranThiHue@tls.vn
to be active. Because investors’ demand for VGBs remains high and key interest rates probably
decrease further, bond yields are likely to drop in coming time.
Chart 4: Reference VGBs’ yields (%)
11.5
11.0
10.5
10.0
9.5
9.0
8.5
8.0
1y
2y
3y
This week
5y
7y
Last Week
10y
15y
Last Month
Source: Bloomberg
Chart 5: Monthly issued VGBs (VND1,000 bn)
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
Đáo hạn
phát hành
Source: MBS, Bloomberg
Domestic bond market
Table 1: Recent VGBs auctions in HNX
3
MBS Vietnam: 98 Nguy Nhu Kon Tum,
Thanh Xuan, Hanoi, Vietnam
Website: www.tls.vn
Bloomberg : TLSV<GO>
Date
Issuer
Tenor
16/5
NHPTVN
5
16/5
NHPTVN
3
11/5
KBNN
3
11/5
KBNN
5
11/5
KBNN
2
10/5
NHCSXH
10/5
9/4
Winning
amount
(VND bn)
800
Registered
amount
(VND bn)
2532
Offered
amount
(VND bn)
3000
Winning
IR (%)
600
4100
2000
9.5
3000
10900
3000
9.15
3000
5152
3000
9.45
1000
6320
1000
8.95
5
150
350
700
10.7
NHCSXH
3
100
1350
300
10.6
NHCSXH
3
500
1100
1000
12,03
9/4
NHCSXH
5
0
200
1000
0
16/4
KBNN
2
1979
4579
2000
11,06
Ceiling
rate (%)
9,8
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16/4
KBNN
3
2000
7400
2000
10,8
16/4
KBNN
5
2000
6500
2000
10,8
Source: HNX
Table 2: Outright transactions on HNX
Date
MBS Vietnam: 98 Nguy Nhu Kon Tum,
Thanh Xuan, Hanoi, Vietnam
Website: www.tls.vn
Bloomberg : TLSV<GO>
Remaining
tenor
Coupon
(%)
(%)
Volume
Price
(VND)
Yield
(%)
16/5
TD1214029
2
11,00
1.400.000
104.213
8,50
16/5
VDB111010
14
11,50
112.04
110.821
10,00
16/5
VDB110019
8
11,50
551.6
107.934
10,00
16/5
TP4A3005
18
9,25
877.2
95.7
10,00
16/5
TP4A3205
18
9,25
75.2
95.697
10,00
15/5
TD1215001
3
12,10
2.000.000
106.964
9,00
15/5
CPB0813005
1
8,50
2.000.000
99.136
9,75
15/5
TB1013040
1
11,25
400
100.892
10,25
15/5
TD1114049
2
12,34
1.000.000
106.505
8,90
15/5
TD1013038
1
11,25
1.000.000
101.511
9,60
14/5
B1013040
1
11,25
1.600.000
101.4
9,70
14/5
TD1217002
5
12,15
600
109.519
9,50
14/5
TD1214011
2
11,59
200
103.49
9,30
14/5
TD1215032
3
10,80
200
103.524
9,35
14/5
TD1013049
1
10,60
2.000.000
100.552
10,00
11/5
TD1217036
5
10,80
2.000.000
102.691
10,07
11/5
VDB110025
3
11,40
2.000.000
103.511
10,00
11/5
VDB111003
4
11,50
2.000.000
103.126
10,40
11/5
TD1113038
1
12,42
200
103.496
8,90
10/5
VDB111016
2
11,30
4.000.000
101.902
10,00
10/5
QHB1020028
8
11,50
12.000.000
102.533
11,00
10/5
TD1215001
3
12,10
1.000.000
106.395
9,25
10/5
TD1121021
9
11,50
1.000.000
108.415
10,00
10/5
TD1217036
5
10,80
600
100.071
10,77
9/5
TB1013042
1
11,02
2.000.000.000
100.801
10,15
9/5
TD1114053
2
12,28
2.000.000.000
103.683
10,35
9/5
TD1217036
2
10,80
2.000.000.000
101.151
10,48
9/5
TD1214029
2
11,00
2.000.000.000
99.865
11,06
Source: HNX
4
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Regional bond market
Table 3: Local Government bond yields (%) as of May 2012
1N
USA
2N
3N
5N
7N
10N
0.2935
0.4183
0.8702
1.408
2.0104
Singapore
1.48
0.62
1.48
Vietnam
11.65
11.56
11.53
11.56
11.62
11.56
Indonesia
4.274
5.609
4.793
4.948
5.436
5.609
2.867
3.473
2.966
3.227
3.385
3.473
3.0381
5.311
3.9769
4.825
4.8481
5.311
Japan
0.112
0.993
0.14
0.298
0.562
0.993
China
2.95
3.57
3.06
3.23
3.47
3.57
Thailand
3.09
3.447
3.219
3.405
3.446
3.447
0.162
1.342
0.31
0.541
0.937
1.342
Malaysia
Philippines
Hong Kong
Source: Bloomberg
Chart 6: Vietnam 5 year CDS
800
600
400
200
Jan-00
Aug-06
Nov-06
Mar-07
Jun-07
Sep-07
Dec-07
Apr-08
Jul-08
Oct-08
Feb-09
May-09
Aug-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
0
Source: Bloomberg
Chart 7: Yields of international government bonds issued in 2005 (%)
Vietnam
8
Indonesia
7
6
5
4
3
2
1
0
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Source: Bloomberg
5
MBS Vietnam: 98 Nguy Nhu Kon Tum,
Thanh Xuan, Hanoi, Vietnam
Website: www.tls.vn
Bloomberg : TLSV<GO>
Sales & Client Trading
Tran Thi Hue Phuong
E: Phuong.TranThiHue@tls.vn
PRODUCT
This product is weekly published, focusing on Vietnam’s fixed income market. In this report, we link our macroeconomic
findings and money market changes to the bond market performance. Discussions are written by Tran Thi Thanh Thao
(Master of Finance, Deakin University, Australia). MBS publishes this report, but all errors if any are the author’s. We
thank clients for reading our research products and giving us constructive feedbacks.
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Bank, MB Land, MB Asset Management and MB Capital, MBS is able to leverage substantial human, financial and
technological resources to provide its clients with tailored products and services that few securities firms in Vietnam can
match. Since its establishment, MBS has become widely regarded throughout Vietnam as:
A leading brokerage firm – ranked No.1 in terms of brokerage market share since 2009;
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6
MBS Vietnam: 98 Nguy Nhu Kon Tum,
Thanh Xuan, Hanoi, Vietnam
Website: www.tls.vn
Bloomberg : TLSV<GO>
Sales & Client Trading
Tran Thi Hue Phuong
E: Phuong.TranThiHue@tls.vn