Fixed Income February 2023 - SBV actively uses T-bills to absorb excess liquidity

Yields declined in the primary and secondary markets on excess liquidity

- In February, G-bond issuance increased 11.5% MoM to VND36.6tn (USD1.6bn). Demand for G-bonds in the primary market remained high as the bid / offered rate was 3.0x. In 2M 2023, the Vietnam State Treasury (VST) issued VND69.4tn (USD3.0bn) of G-bonds, which doubled the amount issued in 2M 2022 and completed 64.3% of Q1 2023 plan and 17.4% of the annual plan.

- In the secondary market, average daily trading value (ADTV) surged 27.6% MoM to VND5.6tn (USD237mn) and was driven by outright transactions, which jumped 57.4% MoM to VND3.6tn (USD154mn) per day in February.

- Yields declined in both the primary and secondary markets. The declines in bond yields in February could be attributed to excess liquidity in the system. In the secondary market, 1Y and 5Y yields were at 3.82% (-40 bps MoM) and 3.87% (-43 bps MoM) at the end of February.