Fixed-Income Research. Fixed-Income Report. Weekly report May 24 th,2016. Round-up

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1 Fixed-Income Research Weekly report May 24 th,2016 Fixed-Income Report May/16 th -20 th /2016 Round-up Primary market was active. Trading volume increased. Yield curve gently steepened. In this issue Round up 7.5 Bond Yields Bond market Interest rates Y 2Y 3Y 5Y 7Y 10Y Last month Last week This week VND11,480 bn (+20.07% wow) worth of bond was issued. VND35,217 bn (+15.33% wow) was traded on the secondary market. 3Y, 5Y and 20Y winning rates located at 5.3% (-20 bps), 6.14% (-15 bps) and 7.75% (+0 bps) respectively. Interbank rates tumbled during the week. SBV net withdrew VND310 bn via OMO channels. Dinh Thi Huyen Trang (ext. 117) dthtrang@vcbs.com.vn Yield curve gently steepened. According to Bloomberg data, 1Y, 2Y, 3Y, 5Y, 7Y and 10Y bond yields posted at 4.66% (-4.5 bps), 5.012% (-0.44 bps), 5.42% (-1.52 bps), 6.216% (-0.92 bps), 6.766% (-0.15 bps) and 6.99% (0 bps) respectively. Liquidity of bank might not be as ample as that of last week. Bond yields of short and medium tenors might slightly bounce back after tumbling, especially short tenors. See Disclaimer at Page 6 Macroeconomic, Fixed-Income, Financial and Corporation Information updated at Research Department VCBS Page 0

2 Fixed-Income Report Bond Market Primary Market Demand improved VND11,480 bn (+20.07% wow) worth of bond was issued VND11,480 bn (+20.07% wow) worth of bond was issued. The entire amount was issued by the State Treasury, including VND1,000 bn for 3Y tenor, VND10,400 bn for 5Y and VND80 bn for 20Y tenor. The average registering-to-offering ratio posted at 325%, while the winningto-offering ratio was recorded at 92.58%. Bond demand remained high and focused on short and medium tenors. 3Y, 5Y and 20Y winning rates located at 5.3% (-20 bps), 6.14% (-15 bps) and 7.75% (+0 bps) respectively. Next week, the winning rates will not experience a significant decrease as in last week. Instead, we expect the rates might go flat or slightly tick up. Secondary Market Trading volume increased. Yield curve gently steepened. VND35,217 bn (+15.33% wow) was traded on the secondary market VND35,217 bn (+15.33% wow) was traded on the secondary market. Outright and repo values were at VND22,232 bn and VND12,985 bn. For outright activity, ST-Bond made up 86.93% of the total trading volume and the rest belonged to VDB bonds. Repo rates significantly decreased as compared to that of last week, ranging between 1.6% - 4.6% for 2w-3m tenors. Yield curve gently steepened. According to Bloomberg data, 1Y, 2Y, 3Y, 5Y, 7Y and 10Y bond yields posted at 4.66% (-4.5 bps), 5.012% (-0.44 bps), 5.42% (-1.52 bps), 6.216% (-0.92 bps), 6.766% (-0.15 bps) and 6.99% (0 bps) respectively. Banks normally close figures with SBV in the end of month. Therefore, liquidity of bank might not be as ample as that of last week. However, it will remain high and continue supporting bond trading on the secondary market in coming week. Furthermore, bond yields of short and medium tenors might slightly bounce back after tumbling, especially short tenors. 7.5 Bond Yields Y 2Y 3Y 5Y 7Y 10Y Last month Last week This week Research Department VCBS Page 1

3 Jan 04- Jan 08 Jan 11- Jan 15 Jan 18- Jan 22 Jan 25- Jan 29 Feb 01- Feb 05 Feb 15- Feb 19 Feb 22- Feb 26 Feb 29- Mar 04 Mar 07- Mar 11 Mar 14- Mar 18 Mar 21- Mar 25 Mar 28- Apr 01 Apr 04-Apr 08 Apr 11-Apr 15 Apr 19-Apr 22 Apr 25-Apr 29 May 2-May 6 May 9-May13 May 16-May 20 Fixed-Income Report Foreign investors net bought VND470 bn this week. Foreign investors net bought VND470 bn this week, plunging as compared to that of previous weeks. In details, they bought VND655 bn worth of 12M bonds while sold out VND353 bn worth of 5Y bonds. We think that bond yields of 3Y and 5Y went down to quiet low rates during numorous weeks. Accordingly, these bonds attractiveness decreases in foreign investors eyes, which directs them to shorter tenors, which are less risky. We expected that this group of investors will act quieter next week. However, net buying trend is likely maintained thanks for the support from a stable exchange rate in the market. Foreign Investment in the secondary market Net position (Unit: bn.vnd) Source: HNX, VCBS INTEREST RATE Interbank Rates Interbank rates significantly decreased. Interbank rates maintained strongly going down during the week. In details, ON 3M rates respectively posted at 0.8%, 1.133%, 1.35%, 2.9% and 4.2%, according to Bloomberg data. (1) Low cash demand; and SBV s significant buying movement of USD currency resulted in banks ample liquidity. Next week or the last week of the month also, interbank rates might remain low and seasonally tick up as compared to those of last week. 6.0 Interbank rates ON 1W 2W 1M 3M 1 month ago Last week This week Research Department VCBS Page 2

4 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Fixed-Income Report Open Market Operation SBV net withdrew VND310 bn SBV net withdrew VND310 bn via OMO channels this week. The entire amount came from repo activities. In details, all of VND310 bn was dued and no more VND was offered. As a result, the outstanding of SBV-Bill and Reverse repo stayed at VND0 bn. The amount of matured repo will post at VND0 bn next week while bank s liquidity remains ample and does not need further regulatory from the Central Bank. 300, , , , ,000 50,000 - Reverse Repo billion VND 250, , , ,000 50,000 - SBV-Bill Oustanding billion VND END. Research Department VCBS Page 3

5 Fixed-Income Report APPENDICES Bond Auctions Auction date ST bills Tenor Offering volume Registering volume Winning volume Ceiling rate (%) Winning rate (%) Winning/ Offering No. of bidders Issuer Government and government-backed bonds 4-May ,000 5,518 2, % 13 ST 4-May ,200 15,765 5, % 17 ST 4-May , % 2 ST 11-May % 17 ST 11-May % 6 ST 18-May % 11 ST 18-May % 19 ST 18-May % 2 ST Secondary Market Week 5/9-5/13 Issuer Value Value share Value Value share Outright ST 15, % 19, % VDB 1, % 2, % Others - - Subtotal (1) 16,754 22,232 Repo Repo 13, % 12, % Reserve Repo 13, % 13, % Subtotal (2) 27,424 26,219 ST bills Outright - - Repo - - Subtotal (3) - - Total (1)+(2)+(3) 44,178 48,451 Open Market Operation Reverse Repo Outright (SBV Bills) Date Due Offer Balance Outstanding Due Offer Balance Outstanding 4/18-4/22 21,188 35,300 14,112 35, /25-4/29 18,234 2,413 (15,821) 19, /2-5/6 18,979 5,030 (13,949) 5, /9-5/13 5, (5,220) /16-5/ (310) Research Department VCBS Page 4

6 Fixed-Income Report DISCLAIMER This report is designed to provide updated information on the fixed-income, including bonds, interest rates, some other related. The VCBS analysts exert their best efforts to obtain the most accurate and timely information available from various sources, including information pertaining to market prices, yields and rates. All information stated in the report has been collected and assessed as carefully as possible. It must be stressed that all opinions, judgments, estimations and projections in this report represent independent views of the analyst at the date of publication. Therefore, this report should be best considered a reference and indicative only. It is not an offer or advice to buy or sell or any actions related to any assets. VCBS and/or Departments of VCBS as well as any affiliate of VCBS or affiliate that VCBS belongs to or is related to (thereafter, VCBS), provide no warranty or undertaking of any kind in respect to the information and materials found on, or linked to the report and no obligation to update the information after the report was released. VCBS does not bear any responsibility for the accuracy of the material posted or the information contained therein, or for any consequences arising from its use, and does not invite or accept reliance being placed on any materials or information so provided. This report may not be copied, reproduced, published or redistributed for any purpose without the written permission of an authorized representative of VCBS. Please cite sources when quoting. Copyright 2012 Vietcombank Securities Company. All rights reserved. CONTACT INFORMATION Tran Anh Tuan, CFA Head of Research tatuan@vcbs.com.vn Dinh Thi Huyen Trang Fixed income Analyst dthtrang@vcbs.com.vn VIETCOMBANK SECURITIES COMPANY Ha Noi Headquarter Ho Chi Minh Branch Da Nang Branch Phu My Hung Transaction Unit Giang Vo Transaction Unit Can Tho Representative Office Vung Tau Representative Office An Giang Representative Office Dong Nai Representative Office Hai Phong Representative Office Binh Duong Representative Office Floor 12th & 17th, Vietcombank Tower, 198 Tran Quang Khai Street, Hoan Kiem District, Hanoi Tel: (84-4) ext: 140/143/144/149/150/151 Floor 1 st and 7 th, Green Star Building, 70 Pham Ngoc Thach Street, Ward 6, District No. 3, Ho Chi Minh City Tel: (84-8) Floor 12 th, 135 Nguyen Van Linh Street, Thanh Khe District, Da Nang City Tel: (84-511) ext: 801/802 Lawrence Sting Building, 801 Nguyen Luong Bang Street, Phu My Hung Urban Zone, District No. 7, Ho Chi Minh City Tel: (84-8) Floor 1 st, Building C4 Giang Vo, Giang Vo Ward, Ba Dinh District, Hanoi Tel: (84-4) Floor 1 st, Vietcombank Can Tho Building, 7 Hoa Binh Avenue, Ninh Kieu District, Can Tho City Tel: (84-710) Floor 1st, 27 Le Loi Street, Vung Tau City, Ba Ria - Vung Tau Province Tel: (84-64) /75/76/77/78 Floor 6 th, Nguyen Hue Building, 9/9 Tran Hung Dao Street, My Xuyen Ward, Long Xuyen City, An Giang Province Tel: (84-76) F240-F241 Vo Thi Sau Street, 7 th Block, Thong Nhat Ward, Bien Hoa City, Dong Nai Province Tel: (84-61) Floor 2 nd, 11 Hoang Dieu Street, Minh Khai Ward, Hong Bang District, Hai Phong City Tel: (+84-76) Binh Duong Route Phu Hoa Ward Thu Dau Mot City - Binh Duong Province Tel: (+84-76) Research Department VCBS Page 5