Fixed-Income Research

Weekly report December, 21st, 2018

Fixed-Income Report Round-up

High winning volume was still for 10Y and 15Y bond.
Short-term bond yields decreased this week.
Interbank settled stably at a high level.
Dec 17th- 21st/2018
Yield Curve
5.5
In this issue
 Round up 5.0
 Bond market
4.5
 Interest rates
4.0

3.5
1Y 2Y 3Y 5Y 7Y 10Y 15Y
This week Last week Last month

Source: Bloomberg, VCBS

 VND 16,010 bn was mobilized this week. VND 50,010 bn (+41% wow) was traded
on the secondary market.
 Yield curve became more steepened because short-term bond yield decreased more
than long-term ones. According to Bloomberg data, 1Y, 2Y, 3Y, 5Y, 7Y, 10Y and 15Y bond
yields posted at 4.013% (-13.7 bps), 4.1% (-20.5 bps), 4.158% (-26.7 bps), 4.438% (-13 bps),
4.8% (-5 bps), 5.138% (-3 bps) and 5.4% (-1.3 bps) respectively. Also, it should be noted that
Le Thu Ha from last 2 weeks, winning rates in primary market stayed closed to yields in secondary
+84 24 3936 6990 (ext. 7182) market.
ltha_ho@vcbs.com.vn  Interbank rate still settled at a high level. In details, ON – 3M rates respectively
posted at 4.417%, 4.517%, 4.617%, 4.817% and 4.9% according to Bloomberg data.
 Foreign investors net bought roughly VND 762 bn this week.
 SBV net injected VND 18,725.9 bn via OMO channel.

VCBS Commentary Dec 24th – 28th

See Disclaimer at Page 5
Macroeconomic, Fixed-Income,
Financial and Corporation
Information updated at
www.vcbs.com.vn/vn/Services/AnalysisResearch
 We believe FED's interest rate trend is still irreversible and will have some impact on
the market, especially in emerging markets such as Vietnam in the medium and long term.
Hence, the downward force on bond yields last week will end soon. Next week we believe
that, bond yield shall increase slightly.
 We believe that the closer we get to the year end, the harder for interbank rates to
press lower in the context of no special supportive news in the market.

Research Department VCBS Page | 0

 Fixed-Income Report

Bond Market

Primary Market
High volume issued in 10Y and 15Y bond.

VND 16,010 bn was mobilized this
week.
VND 16,010 bn was mobilized this week from ST and VDB. In detail, For ST-bond
VND 6,500 bn and 5,210 bn worth of bond issued at 10Y & 15Y. Winning rates for 10Y
and 15Y were unchanged compared to last week, settled at 5,1% and 5.3% respectively.
The registered volume to offering volume ratio for 10Y, & 15Y tenors 1.73, 1.13
respectively. Winning –to offering ratio was 90%.
Meanwhile, VDB mobilized VND 4,300 bn at 3Y, 5Y, 7Y and 10Y.
VBSP did not mobilize bond this week.

Winning rates GB Auction results Vol (VND bn)

8.50% 12000

7.50% 10000

6.50% 8000

5.50% 6000

4.50% 4000

3.50% 2000

2.50% 0
May 02- May 04
May 14- May 18
May 28- June 01
Aug 07- Aug 11
Aug 21- Aug 28

Nov 13- Nov 17

Oct 29-Nov 02
Nov 12- Nov 16
Nov 26- Nov 30
Sep 05- Sep 08
Sep 18- Sep 25

Feb 05- Feb 09

Sep 17- Sep 21

Apr 02- Apr 06
Apr 16- Apr 20
Nov 27- Dec 01

Mar 19- Mar 23

June 11 - June 15
June 25 - June 29

Aug 06 - Aug 10
Aug 20 - Aug 24
July 10- July 14
July 24- July 28

Oct 02- Oct 06

Oct 16- Oct 20

Oct 01- Oct 05

Oct 15- Oct 19
Oct 30- Nov 03

Jan 08- Jan 12

Jan 22- Jan 26

Sep 04 - Sep 09
Mar 05-Mar 09

Jul 09 - Jul 13
Jul 23 - Jul 27
Dec 11- Dec 15
Dec 25- Dec 29

Dec 10- Dec 14

Volume 5Y 7Y 10Y
15Y 20Y 30Y

Source: HNX, VCBS

Secondary Market
Short-term bond yields decreased. Liquidity increased considerably.

VND 50,010 bn (+41% wow) was
traded on the secondary market.
VND 50,010 bn (+41% wow) was traded on the secondary market. Outright and repo
values were at VND 24,122 bn and VND 25,898 bn respectively. Regarding outright, ST-
Bond kept dominating trading volume with 97%. Remarkably, this week a large
proportion of bond trading (38%) belonged to long-term bond (>10 year) followed by
short-term bond (<5year) (36%).
Yield curve became more steepened because short-term bond yield decreased more
than long-term ones. According to Bloomberg data, 1Y, 2Y, 3Y, 5Y, 7Y, 10Y and 15Y
bond yields posted at 4.013% (-13.7 bps), 4.1% (-20.5 bps), 4.158% (-26.7 bps), 4.438% (-
13 bps), 4.8% (-5 bps), 5.138% (-3 bps) and 5.4% (-1.3 bps) respectively. Also, it should be
noted that from last 2 weeks, winning rates in primary market stayed closed to yields in
secondary market.

Research Department VCBS Page | 1

 Fixed-Income Report

Yield Curve
5.5

5.0

4.5

4.0

3.5
1Y 2Y 3Y 5Y 7Y 10Y 15Y
This week Last week Last month

Source: Bloomberg, VCBS

In FOMC took place last week, FED officially hike interest rate as expected by the
majority of investors. In the meantime, for the year of 2019, FED's tightening policy is
expected to slow down from three times increase to two times adjust interest. Additionally,
FED also adjusts the slightly reduced growth prospects of the US economy. For bond
market, it seemed that the effect of this event has already been reflected and therefore can
be used as one of the reason to explain the downward force on bond yield at the end of the
week in the context of foreign exchanges rates was quite stable.
Nevertheless, we believe FED's interest rate trend is still irreversible and will have some
impact on the market, especially in emerging markets such as Vietnam in the medium and
long term. Hence, the downward force on bond yields last week will end soon. Next week
we believe that, bond yield shall increase slightly.

Foreign investors net bought roughly VND 762 bn this week. Except for tenor 10Y-
Foreign investors net bought 15Y, almost all tenors recorded a net-bought value. It seems that foreign as usual is taking
roughly VND 762 bn this week. advantage of the time when liquidity in banking system became tighter. However, it is
unlikely that foreign will soon be strongly active again in the market.

Foreign Investment in the secondary market 2018

Net position (Unit: bn.VND)

Apr 09- Apr 13
Apr 23- Apr 27
May 07- May 11
May 21- May 25
June 04- June 08
June 18- June 22
July 02- July 06
July 16- July 20
Jan 02- Jan 05
Jan 15- Jan 19
Jan 29- Feb 02

Aug 13- Aug 17

Aug 27- Aug 31

Oct 08- Oct 12

Oct 22- Oct 26
Nov 05- Nov 09
Nov 19- Nov 23
Dec 03- Dec 07
Dec 17- Dec 21
Feb 12- Feb 16
Feb 26- Mar 02

July 30- Aug 03

Sep 10- Sep 14

Sep 24- Sep 28
Mar 12- Mar 16
Mar 26- Mar 30

Source: HNX, VCBS

INTEREST RATE

Research Department VCBS Page | 2

 Fixed-Income Report

Interbank Rates

Interbank rate still settled at a high

Interbank rate still settled at a high level. In details, ON – 3M rates respectively posted
level.
at 4.417%, 4.517%, 4.617%, 4.817% and 4.9% according to Bloomberg data.

Interbank rates
5.4

4.6

3.8

3.0
ON 1W 2W 1M 3M
This week Last week Last month

Source: Bloomberg, VCBS

We did not change our view that when it is closer we get to the year end, the harder for
interbank rates to press lower in the context of no special supportive news in the market.
Hence, it is unlikely that interbank rates will decrease in the last week of the year.
Open Market Operation
SBV net injected VND 18,725.9 bn
SBV net injected VND 18,725.9 bn via OMO channel. For Outrights, VND 25,960 bn
via OMO channel.
worth of 140- day SBV bills mature this week. With these outright mature, banks will take
full use of these resources to answer increasing liquidity at the end of the year due to
seasonal factor.

Reverse Repo SBV-Bill Oustanding

300
250
x VND 1,000 bn

x VND 1,000bn

250
200
200
150
150

100 100

50 50
-
-
Sep-16

Sep-17

Sep-18
Mar-16
May-16

Mar-17
May-17

Mar-18
May-18
Jul-16
Nov-16

Jul-17
Nov-17

Jul-18
Nov-18
Jan-17

Jan-18

Mar-16

Sep-16

Mar-17

Sep-17

Mar-18

Sep-18
May-16

May-17

May-18
Jul-16

Nov-16
Jan-17

Jul-17

Nov-17
Jan-18

Jul-18

Nov-18

Source: Bloomberg, VCBS

END.

APPENDICES

Research Department VCBS Page | 3

 Fixed-Income Report

Bond Auctions
Offering Registering Winning Register to Winning rate Winning/
Auction date Tenor volume volume volume Offering Ratio (%) Offering Issuer
ST bills
Government and government-backed bonds
19-Dec-18 10Y 6,500 11,249 6,500 1.73 5.1 100.00% ST
19-Dec-18 15Y 6,500 7,360 5,210 1.13 5.3 80.15% ST
18-Dec-18 3Y 1,500 2,401 1,500 1.60 5.1 100.00% VDB
18-Dec-18 7Y 3,000 1,300 1,000 0.43 5.5 33.33% VDB
18-Dec-18 10Y 2,000 1,600 1,100 0.80 5.8 55.00% VDB
18-Dec-18 15Y 2,977 - - 0.00 0 0.00% VDB
18-Dec-18 5Y 1,500 800 700 0.53 5.3 46.67% VDB

Secondary Market
Week 10-14 Dec Week 17-21 Dec
Issuer Value Value share Value Value share
Outright
11,978 82.07% 23,311 96.68%
1,819 12.46% 801 3.32%
797 5.46% - 0.00%
- 0.00% - 0.00%
Repo 14,594 100.00% 24,112 100.00%

Outright 21,411 54.85%

25,898 53.49%
Repo 17,623 45.15% 22,519 46.51%
Subtotal (3) 39,033 100.00% 48,417 100.00%
ST bills
- -
- -

Total (1)+(2)+(3) 53,627 72,529

Open Market Operation

Reverse Repo Outright (SBV Bills)
Date Due Offer Balance Outstanding Due Offer Balance Outstanding
07/30-08/03 17,000 0 (17,000) 0 6,010 48,960 42,950 101,030
08/06-08/10 0 4,096 4,096 4,096 8,500 3,400 (5,100) 90,730
08/13-08/17 4,096 12,089 7,993 12,089 10,100 700 (9,400) 81,330
08/20-08/24 12,089 18,982 6,893 18,982 700 702 2 81,332
08/27-08/31 18,982 7,702 (11,280) 7,702 6,802 1,100 (5,702) 75,630
09/03-09/07 7,702 7,349 (353) 7,349 1,100 0 (1,100) 74,530
09/10-09/14 7,349 330 (7,019) 330 2,000 4,500 2,500 77,030
09/17-09/21 330 20 (310) 20 36,400 22,830 (13,570) 63,461
09/24-09/28 20 456 436 456 10,500 25,620 15,120 78,581
10/05 -10/01 456 217 (239) 217 29,980 5,340 (24,640) 53,941
10/08 -10/12 217 0 (217) 0 22,981 4,400 (16,801) 37,140
10/15 –10/19 0 0 0 0 1,900 1,550 (350) 36,790
10/22- 10/26 0 44,345 44,345 44,345 4,280 2,000 (2,280) 34,510
10/29- 11/02 44,345 34,000 (10,346) 34,000 3,550 0 (3,550) 30,960
11/05- 11/09 34,000 52,658 18,659 52,658 2,000 0 (2,000) 28,960
11/12- 11/16 52,658 58,566 5,907 58,566 0 0 0 28,960
11/19- 11/23 58,566 63,655 5,089 63,655 0 0 0 28,960
11/26- 11/30 63,655 44,785 (18,870) 44,785 0 0 0 28,960
12/03- 12/07 44,785 68,313 23,528 68,313 0 0 0 28,960
12/10- 12/14 68,313 60,033 (8,280) 60,033 0 0 0 28,960
12/17- 12/21 60,033 52,799 (7,234) 52,799 25,960 0 (25,960) 3,000

Research Department VCBS Page | 4

 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 Le Thu Ha
Head of Research Senior Analyst- Economic research
tmhoang@vcbs.com.vn ltha_ho@vcbs.com.vn

VIETCOMBANK SECURITIES COMPANY

http://www.vcbs.com.vn

Ha Noi Headquarter
Ho Chi Minh Branch
Da Nang Branch
Nam Sai Gon 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)-39366990 ext: 140/143/144/149/150/151
Floor 1st and 7th, Green Star Building, 70 Pham Ngoc Thach Street, Ward 6, District No. 3, Ho Chi Minh City
Tel: (84-8)-3820 8116
Floor 12th, 135 Nguyen Van Linh Street, Thanh Khe District, Da Nang City
Tel: (84-511)-3888991 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)-54136573
Floor 1st, Building C4 Giang Vo, Giang Vo Ward, Ba Dinh District, Hanoi
Tel: (84-4)-37265551
Floor 1st, Vietcombank Can Tho Building, 7 Hoa Binh Avenue, Ninh Kieu District, Can Tho City
Tel: (84-710)-3750888
Floor 1st, 27 Le Loi Street, Vung Tau City, Ba Ria - Vung Tau Province
Tel: (84-64)-3513974/75/76/77/78
Floor 7th, Vietcombank An Giang Tower, 30-32 Hai Ba Trung,, My Long Ward, Long Xuyen City, An Giang Province
Tel: (84-76)-3949843
1st & 2nd Floor, 79 Hung Dao Vuong, Ward Trung Dung, Bien Hoa City, Dong Nai Province.
Tel: (84-61)-3918815
Floor 2nd, 11 Hoang Dieu Street, Minh Khai Ward, Hong Bang District, Hai Phong City
Tel: (+84-31) 382 1630
Floor 3th, 516 Cach Mang Thang Tam Street, Phu Cuong Ward, Thu Dau Mot City, Binh Duong Province.
Tel: (+84-650) 3855 771

Research Department VCBS Page | 5