Bankers ‘satisfied’ with first Treasury auction
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.
The man rides his bike past the Myanma Economic Bank on July.