Vietnam Bond Market
Introduction
In recent years, the issue of efficiently mobilizing capital has become the concern of all companies. There are some ways of doing this: borrowing from the banks, issuing stocks or issuing bonds. However, when the interest rate of borrowing from banks is very high due to high inflation, together with the stock market is quite instable; calling for capital from bond market is much more preferred by investors.
In the context of this report, some major points regarding the bond market in Vietnam are presented. Firstly, a common picture about the Vietnam bond market is drawn. Next come the types of bonds and major participants in this market. Finally, several ways by which bonds are issued are described in details.
I/ Overview of Vietnam bond market
The Vietnam bond market was established in 2000, but it only developed sharply after 2002 when the government allowed issuing many types of bonds and especially after the appearance of the Ho Chi Minh stock exchange.
Recently, the outstanding volume of bonds has increased rapidly, as shown in the graph below. Figure 1. Bonds outstanding volume and bond outstanding/ GDP.
(Source: Ministry of Finance of Vietnam)
Up to the year 2006, the proportion of outstanding bond volume over GDP reached the figure of 13%, in comparison with only 3% in 2001. Nevertheless, compared with the Vietnam stock market that accounts for more than 40% of the total GDP, that of bonds is very low.
In particular, this rate of Vietnam is far below the level of other countries in Asia. In most Asia countries, the bond accounts for more than half of the total GDP whereas in Vietnam, it takes less than 15% of GDP. Figure 2. Outstanding bond volume/GDP in some Asia countries.
(Source: Ministry of Finance of Vietnam)
All things considered, one of the main features easily to be realized in Vietnam now is that the bond market has not been attractive enough to most investors. Yet, according to many specialists, it is likely
In recent years, the issue of efficiently mobilizing capital has become the concern of all companies. There are some ways of doing this: borrowing from the banks, issuing stocks or issuing bonds. However, when the interest rate of borrowing from banks is very high due to high inflation, together with the stock market is quite instable; calling for capital from bond market is much more preferred by investors.
In the context of this report, some major points regarding the bond market in Vietnam are presented. Firstly, a common picture about the Vietnam bond market is drawn. Next come the types of bonds and major participants in this market. Finally, several ways by which bonds are issued are described in details.
I/ Overview of Vietnam bond market
The Vietnam bond market was established in 2000, but it only developed sharply after 2002 when the government allowed issuing many types of bonds and especially after the appearance of the Ho Chi Minh stock exchange.
Recently, the outstanding volume of bonds has increased rapidly, as shown in the graph below. Figure 1. Bonds outstanding volume and bond outstanding/ GDP.
(Source: Ministry of Finance of Vietnam)
Up to the year 2006, the proportion of outstanding bond volume over GDP reached the figure of 13%, in comparison with only 3% in 2001. Nevertheless, compared with the Vietnam stock market that accounts for more than 40% of the total GDP, that of bonds is very low.
In particular, this rate of Vietnam is far below the level of other countries in Asia. In most Asia countries, the bond accounts for more than half of the total GDP whereas in Vietnam, it takes less than 15% of GDP. Figure 2. Outstanding bond volume/GDP in some Asia countries.
(Source: Ministry of Finance of Vietnam)
All things considered, one of the main features easily to be realized in Vietnam now is that the bond market has not been attractive enough to most investors. Yet, according to many specialists, it is likely