vietnam bond market

Topics: Bond, Bonds, Finance Pages: 10 (288 words) Published: April 18, 2014
VIETNAM BOND MARKET

Nguyen Ngoc Anh
Ministry of Finance – Vietnam
11/2009

A YOUNG AND GROWING MARKET


The Vietnam bond market development was boosted when Vietnam entered WTO in 2006. Total market capitalsisation is now at 15% of GDP.
>500 government bonds outstanding on some USD 12 billion
After 2008 foreign exodus the market today is predominantly Vietnamese with a handful of big players. In the absence of mutual funds and pension funds, banks dare key players.

BOND GROWTH 2001-2008
Oustanding bo nds (VNDbn, LHS)

200,000

Outstanding bo nds/GDB (RHS)

160,000

8.97%

120,000

14%
12%
10%
8%

5.16%
80,000
40,000

Secondary market trade value of VDB and Treasury bonds
(USDmn)

16%
14.82% 14.50%

3.53%
2.22%
0.57% 0.79%

-

6%
4%
2%

120

2,500

Outstanding bonds/GDP

240,000

Outstanding bonds



Monthly volume (LHS)
2,000

100

Daily Average (RHS)

80
1,500
60
1,000
40
500

20

0%
2001 2002 2003 2004 2005 2006 2007 2008

-

0
Jan-06

Jul-06

Jan-07

Source: DC

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

2

THE MARKET
Issuers


Government bonds: Issued by the Satte Treasury and authorised issuers such as Vietnam Development Bank (policy bank)



Municipal bonds: issued by city municipalities and provincial governments.



Corporate bonds: issued by SOE’s and private enterprises

Investors


Domestic investor base still small. Ability to absorb supply and demand shocks limited



Off-shore investors still limited (no limitation on foreign holdings of bonds)

Municipal
5%
State Treasury
41%

Corporate
23%

Product range


Mostly plain vanilla fixed coupon bonds



Pseudo floaters fixed with 12m average deposit rate quoted by 4 big SOCB’s.



Callable tier 2, convertibles although mostly with mandatory conversion.

VDB
31%

Date: April 2009

Secondary market although on the increase, still thin


Bond market tend to be very domestic



At times >100 bps diff between public sources and the market.



No surprise discrepancy tend to get worse during period of big movements.

3

GOVERNMENT BONDS


Government bonds here are State Treasury bonds and VDB (Vietnam Development Bank).



Issued institutional debt since 2000. Steady levels of 8.3-8.6% prior WTO.



Approximately 500 government bonds outstanding as of August 2009 with an average size of
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