State sells all zero-coupon bonds
State sells all zero-coupon bonds
The state treasury offloaded all first-ever zero- coupon bonds, worth VND2 trillion (US$88.7 million), on December 25, the Ha Noi Stock Exchange (HNX) said.
The exchange, which is the government bond auctioneer, said three- year bonds, which were not paid periodic interests but got a one-time payment at their maturity, were issued by the finance ministry for the first time as a new product of the G-bond market to make the primary market more attractive to investors.
All bonds were sold at a coupon rate of 5.8 per cent. The exchange said the bonds would be listed and traded on HNX on December 29.
It also said zero-coupon bonds were attractive to investors with long-term financial goals, such as hedge funds and pension funds, because of the high discount rate of zero-coupon bonds. In addition, the investors of zero-coupon bonds can avoid the risk of reinvestment failure that they face with periodic bonds. HNX said it had taken positive steps to prepare the process of launching zero-coupon bonds so that things worked out within the plan this December.
The exchange appreciated the bonds, which could attract insurance funds and pension funds, the two potential investors of the G-bond market. Normally, the major investors of the bond market are commercial banks,
which account for 80 per cent of the G-bond holders. According to local data, despite the pressure of the forex market from December 14 to 18, the primary market still offloaded VND13.32 trillion ($590.7 million) in bonds or 95.1 per cent of the offers.
