Bankers ‘sat­is­fied’ with first Trea­sury auc­tion

The Myanmar Times - - Business - STEVE GIL­MORE s.gil­more@mm­

THE gov­ern­ment held a suc­cess­ful in­au­gu­ral Trea­sury bond auc­tion yes­ter­day, sell­ing K120 bil­lion to three pri­vate com­mer­cial banks and an­other K80 bil­lion to a state-owned lender.

The sale was for K200 bil­lion (US$162 mil­lion) of new bonds in an ex­ist­ing Trea­sury note that ma­tures in May 2018. The gov­ern­ment set K80 bil­lion aside for the largest state-owned lender Myanma Eco­nomic Bank, and of­fered K120 bil­lion to other com­mer­cial banks.

Daw Thin Thin Su, an of­fi­cial at the gov­ern­ment’s Debt Man­age­ment Of­fice, said that AYA Bank, Myawaddy Bank and CB Bank had pur­chased the K120 bil­lion. The three lenders made eight suc­cess­ful bids be­tween them, and for the first time ever, pri­vate bank bids de­ter­mined the yield on a gov­ern­ment bond.

The weighted av­er­age yield from the three banks’ bids was 8.843 per­cent, which de­ter­mined the rate at which MEB was al­lowed to buy its share of the Trea­sury bond. AYA Bank man­ag­ing di­rec­tor U Phyo Aung would not com­ment on the bank’s pur­chase of bonds, but said that in gen­eral the com­mer­cial banks were “some­what sat­is­fied” with the yield.

Pre­vi­ous gov­ern­ments sim­ply fixed the yield on their Trea­sury bond sales at lev­els most banks found unattrac­tive. This in turn led to weak de­mand from com­mer­cial banks, and prompted the gov­ern­ment to rely more on bor­row­ing more from the Cen­tral Bank.

U Maung Maung Win, deputy min­is­ter at the Min­istry of Plan­ning and Fi­nance, said the auc­tion had been a suc­cess and of­fered a good in­vest­ment op­por­tu­nity for lenders.

“It’s a good yield,” he said. “The [com­mer­cial bank] sav­ings de­posit rate is 8pc, so it’s more than that and with very lit­tle risk.”

Daw Thin Thin Su said she ex­pected more banks and more bids in forth­com­ing auc­tions based on the suc­cess of the in­au­gu­ral sale.

There were 22 un­suc­cess­ful bids in the auc­tion amount­ing to K86 bil­lion at yields rang­ing from 8.899pc to 11pc.

The next Trea­sury bond auc­tion will be held next month, and Daw Thin Thin Su said the gov­ern­ment had yet to de­cide on the size and ma­tu­rity.

Photo: Aung Myin Ye Zaw

The man rides his bike past the Myanma Eco­nomic Bank on July.

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