VietNamNet Bridge – By assigning the government to focus on issuing long-term bonds, the National Assembly has shown that it believes the monetary market will be stable in 2015.

In general, the National Assembly’s resolution on state budget estimates only shows figures on receipts and expenses, while it does not specify what the Ministry of Finance needs to do to fulfill the plan.

However, the National Assembly, when setting targets for state budget collection in 2015, has for the first time, said clearly that the government needs to focus on 5-year or longer-term bonds.

The value of government bonds accounts for the highest proportion of the total value of bonds in circulation, 75.38 percent, or VND495.136 trillion. Meanwhile, the value of government-guaranteed bonds accounts for 22.12 percent (VND145.555 trillion) and local authorities bonds 2.5 percent (VND16.48 trillion).

A report showed that 35.2 percent of government bonds are 2-year bonds, while 34.5 percent are 3-year, 21.8 percent are 5-year and 6.1 percent are 10-year. And 15-year term bonds just account for 2.3 percent of the total government bonds issued.

The average duration of government bonds is 2.35 years, while the government strives for the 3.5-year duration.

Analysts say it is necessary to issue longer-term government bonds, because this would help ease pressure on the government to pay debts. It is estimated that VND127 trillion worth of government bonds would mature in 2015, which is nearly double the bonds matured in 2014 (VND72 trillion).

It is foreseeable that the amount of bonds to be due in the next years would also be high, if considering the high volume of short term (one- and three-year bonds) the government issued recently.

The analysts believe that it is quite within reach to issue long-term bonds in the time to come. This was an “impossible mission” in previous years, but things are different this year, when commercial banks have plenty money in their coffers. The Hanoi Stock Exchange has confirmed that it has sold high volumes of 5- and 10-year term bonds so far.

Some bankers, contacted by Thoi bao Kinh te Sai Gon reporters, said there was no need to be pessimistic about the long-term bond issue plan.

“It is true that banks cannot mobilize capital through long-term deposits, so they do not have much money to buy long-term government bonds. However, as money is now in big excess, banks would consider the possibility of buying more 5-year bonds,” the deputy director of a joint stock bank in the south said.

Thanh Mai