Myanmar to start govt bond auctions this month - c.bank

YANGON Jan 2 (Reuters) - Myanmar will formalise sales of
government debt via an auction system in Yangon this month, a
central bank official said on Friday, the latest move to boost
overstretched state coffers and reform the country's fledgling
economy.

"Government treasury bonds will be auctioned electronically
there (Yangon) among local private banks in the beginning and in
the bigger market later," Set Aung, the deputy central bank
governor, told Reuters.

He said interest rates on treasury bonds were fixed at
present, but when the market is opened - tentatively on Jan. 28
- bond prices would be floating and dependent on supply and
demand, interest rates and market trends.

The central bank started issuing three-year and five-year
bonds through state-owned banks in 1993, with the intention to
promote public savings. Two-year bonds were introduced in 2010,
a year before a new government came to power and brought in
international experts to help reform an economy that wilted
under 49 years of army dictatorship.

Interest rates on treasury bonds are presently 8.75 percent
for two-year maturities, 9.0 percent for three-year and 9.5
percent for five-year terms, respectively.

There are four state-owned and 23 local private banks in the
country while nine foreign banks were granted limited operation
licences last year. A stock market is scheduled to be
operational later in 2015.

"This is a positive step forward in the financial reforms in
the country. We welcome it but have to wait and see how it will
come off," said U Htwe, a senior official at United Amara Bank.

The central bank has so far issued a total of 65.4 billion
kyat ($63.8 million) worth of five-year bonds, 23.9 billion kyat
in three-year bonds and 5.55 billion kyat in two-year bonds.

(Editing by Martin Petty and Jacqueline Wong)

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