Vietnam may sell bonds of wider range of maturities

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Vietnam plans to issue bonds of a wider range of maturities in order to diversify the market and improve liquidity, said Tran Xuan Ha, deputy minister of finance.

"We are going to submit a plan to the government in which we will diversify products by issuing different maturities like short-, medium- and long-term bonds," Ha said Tuesday. Vietnam currently has mainly medium-term bonds outstanding, Ha said in an interview during a meeting of finance officials from the 10- member Association of Southeast Asian Nations in Nha Trang, Vietnam.

The country plans to raise VND56 trillion (US$2.9 billion) this year through bond sales to build roads, houses and schools and support economic expansion. The government sold VND33 trillion of local-currency securities in 2009, falling short of a plan to raise VND100 trillion from bond offerings, Nguyen Ngoc Anh, deputy director general of banking and finance at the finance ministry, said in December.

There were about VND154.5 trillion of bonds outstanding issued by the State Treasury and state-owned Vietnam Development Bank as of the end of 2009, according to Ho Chi Minh City Securities Corp. Of these, about 79 percent mature in three years or less, 8 percent are due in five to seven years, and 13 percent have maturities of 10 to 15 years, according to Ho Chi Minh City Securities, the country's third-largest bond brokerage.

Improving market

In order to raise the liquidity in the market, the government also plans to encourage investment funds and insurance companies to buy government debt, deputy finance minister Ha said.

"There are signs that Vietnam's bond market has become better this year compared with last year when the Vietnamese economy was affected by the global financial crisis," he said.

The yield on the five-year notes was unchanged at 12.41 percent Tuesday, the highest since March 25, according to a daily fixing price from banks compiled by Bloomberg. Yields have risen 72 basis points so far this year. In 2009, they increased 1.68 percentage points. A basis point is 0.01 percentage point.

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