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Hanoi stock exchange denies failure in Government bond issuance   2009-09-22 - DTCK

The Hanoi Stock Exchange (HNX) says the low number of bonds sold in recent Government bond bids does not mean they failed.


HNX makes the statement following media criticism the Ministry of Finance for unsold bonds, saying instead that the currently unreasonable ceiling interest rate scheme is the main reason for the lack of success.


By September 9, 40 Dong bond issuances and two Dollar bond issuances had been carried out at HNX. Only 2,310 billion Dong and $230 million worth of capital were raised from the bond bids. 


Local newspapers, quoting finance experts and commercial banks, have labelled it a huge failure and have called on the Ministry of Finance to remove the ceiling interest rate scheme.


However, Tran Van Dung, General Director of HNX, said different analysts will always come up with contrasting conclusions as to whether the bond bids were successful or unsuccessful.


“The volume of capital has always been the factor by which we messure success,” Dung said. .


However, the HNX head adds that in other countries, governments still organise Government bond bids not just because they need capital. Government bonds play an important role in defining macroeconomic policies - especially interest rate policy.


Dung said that since HNX took over Government bond bids, it has been striving to organise a really competitive market which can help create genuine benchmarks.


Regarding the controversial ceiling interest rate scheme, Dung says the Ministry of Finance has its reasons to maintain the scheme and that it will only be removed when there necessary macroeconomic conditions are met.


Commercial banks remain the main participants in Government bond bids. However, banks have seldom joined the recent bids because of two factors – the have limited capital and they fear they would not get the expected interest rates.


Dung adds: “If the Government had really needed capital, it would have offered higher interest rate to successfully mobilize it,” Dung said.


“At this moment, the Government does not think that it has to mobilize capital at any cost.

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