Fixed-Income Research. Fixed-Income Report. Weekly report June 21 st,2016. Round-up

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1 Fixed-Income Research Weekly report June 21 st,2016 Fixed-Income Report June/13 th 17 th /2016 In this issue Round up Bond market Interest rates Round-up Primary market remained active. Trading volume improve. Yield curve steepened Bond Yields Y 2Y 3Y 5Y 7Y 10Y Last month Last week This week VND 13,107 bn (+36.53% wow) worth of bond was issued by ST, VDB and VBSP. VND28,545 bn (+24.81% wow) was traded on the secondary market. In general, the demand remained high expressed through positve winning-tooffering ratio and registering-to-offering ratio. Next week, we expect the winning rates might go flat thanks to ample liquidity in banking system. However, Brexit might be one of factors making investors become more cautious in investment activities. SBV net injected VND16,699 bn via OMO channels. Dinh Thi Huyen Trang (ext. 117) [email protected] Yield curve steepened. According to Bloomberg data, 1Y, 2Y, 3Y, 5Y, 7Y and 10Y bond yields posted at 4.467% (-3.3 bps), 4.967% (+0 bps), 5.397% (+4 bps), 6.133% (+3.3 bps), 6.8% (+1.7 bps) and 7.033% (+1.6 bps) respectively. Investors risk appetite changed and moved to short tenors when Brexit prepares taking place. Next week, we expect bond yiels might fluctuate in tight band. 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 slightly increased. VND13,107 bn (+36.53% wow) worth of bond was issued VND 13,107 bn (+36.53% wow) worth of bond was mobilized. In details, the State Treasury issued VND6,557 bn, VDB issued VND5,000 bn and the rest belonged to VBSP this week. The average registering-to-offering ratio posted at %, while the winning-to-offering ratio was recorded at 85.67%. Overall, bond demand improved as compared to that the previous week. For ST-Bond, 5Y and 10Y winning rates stayed at 6.07% (+0 bps) and 6.94% (+0 bps) respectively. The decline in demand of the 5Y tenor might due to (1) the unattractiveness of current yield levels to many participants and/or (2) large banks have reached their bond holding limit. For VDB-Bond, 3Y and 5Y winning rates located at 5.74% and 6.25% respectively. The winning-to-offering ratio was recorded at 100%. Noted that the last time the 3Y- and 5Y-tenor issued was mid-january For VBSP-Bond, 3Y, 5Y and 15Y winning rates posted at 5.9%, 6.48% and 8.1% respectively. In general, the demand remained high expressed through positve winning-to-offering ratio and registering-to-offering ratio. Next week, we expect the winning rates might go flat thanks to ample liquidity in banking system. However, Brexit might be one of factors making investors become more cautious in investment activities. Secondary Market Trading volume improved. Yield curve steepened. VND28,545 bn (+24.81% wow) was traded on the secondary market VND28,545 bn (+24.81% wow) was traded on the secondary market. Outright and repo values were at VND16,821 bn and VND11,724 bn. For outright activity, ST-Bond made up more than 83% of the total trading volume while the rest belonged to VDB bonds and orthers. Repo rates slightly decreased as compared to that of last week, ranging between 2.2% - 4.2% for 2w 3m tenors. Yield curve steepened. According to Bloomberg data, 1Y, 2Y, 3Y, 5Y, 7Y and 10Y bond yields posted at 4.467% (-3.3 bps), 4.967% (+0 bps), 5.397% (+4 bps), 6.133% (+3.3 bps), 6.8% (+1.7 bps) and 7.033% (+1.6 bps) respectively. Investors risk appetite changed and moved to short tenors when Brexit prepares taking place. Next week, we expect bond yiels might fluctuate in a tight band. 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 May 23-May27 May 30-Jun 3 Jun 6-Jun 10 Jun 13-Jun 17 Fixed-Income Report 7.3 Bond Yields Y 2Y 3Y 5Y 7Y 10Y Last month Last week This week Foreign investors net bought VND1,508 bn this week. Foreign investors net bought VND1,508 bn this week. Most of the amount came from 3Y and 2Y tenors with value of VND679 bn and VND445 bn respectively. This positive sign benefited from the recent stable exchange market and declined CDS rate. We expect that foreign investors are likely to stay prudent in buying activities until June 23 rd, as soon as the Great Britain decides whether to stay or leave the European Union. Hence, investors might continue to invest on short tenor bonds rather than long tenor bonds. Foreign Investment in the secondary market Net position (Unit: bn.vnd) Source: HNX, VCBS INTEREST RATE Interbank Rates Interbank rates declined this week. Interbank rates declined this week. In details, ON 3M rates respectively posted at 0.867%, 1.33%, 1.667%, 2.567% and 3.767%, according to Bloomberg data. Ample liquidity in banking system continued to be the main reason for an decrease of interbank rates. Next week, banks liquidity is likely to similar to the previous week s given modest credit growth. Accordingly, we expect that the rates might continue to go in a tight band as compared to those of last 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 5.0 Interbank rates ON 1W 2W 1M 3M 1 month ago Last week This week Open Market Operation SBV net injected VND16,699 bn SBV net injected VND16,699 via OMO channels this week. The entire amount came from outright activities. In details, all of VND16,699 was dued and none was offered. As a result, the outstanding of SBV-Bill and Reverse repo decreased to VND0 bn. The amount of matured SBV-Bill 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 Tenor Offering volume Registering volume Winning volume Ceiling rate (%) Winning rate (%) Winning/ Offering No. of bidders Issuer ST bills Government and government-backed bonds 8-June % 16 ST 8-June % 1 ST 8-June % 2 ST 15-June % 17 ST 15-June % 4 ST 16-June % VBSP 16-June % VBSP 16-June % VBSP 17-June % 9 VDB 17-June % 9 VDB Secondary Market Week 6/06-6/10 Week 6/13-6/17 Issuer Value Value share Value Value share Outright ST 12, % 14, % VDB 1, % 2, % Others % Subtotal (1) 18,243 16,822 Repo Repo 8, % Reserve Repo 10, % Subtotal (2) 18,582 ST bills Outright - - Repo - - Subtotal (3) - - Total (1)+(2)+(3) 36,825 Open Market Operation Reverse Repo Outright (SBV Bills) Date Due Offer Balance Outstanding Due Offer Balance Outstanding 5/16-5/ (310) /23-5/ /30-6/ (11) ,698 35,698 35,698 6/06-6/ ,998 5,000 (18,999) 16,699 6/13-6/ ,699 0 (16,699) 0 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 Minh Hoang Chief Economist [email protected] Dinh Thi Huyen Trang Fixed income Analyst [email protected] 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