vietnam bond market

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
●