Vietnam's domestic bond market down 0.4%

DNVN - According to the Asian Development Bank, Vietnam's domestic currency bond market decreased by 0.4% compared to the previous quarter due to the large volume of maturing state bank bills. Outstanding government bonds increased by only 2% compared to the previous quarter.

The latest edition of the Asian Development Bank (ADB)'s Asia Bond Monitor has just said that the sustainable bond market of ASEAN member economies , China, Japan and Korea (ASEAN+3) has increased by 29.3% in 2023. This figure far exceeds the 21% growth of the global and Eurozone sustainable bond markets.

The ASEAN+3 sustainable bond market will reach USD 798.7 billion by the end of 2023 and account for about 20% of the global sustainable bond market. The global and euro area sustainable bond markets will reach USD 4 trillion and USD 1.5 trillion, respectively, by the end of 2023. Sustainable bonds are bond instruments used to finance projects and programs that bring environmental and social benefits.

“ASEAN sustainable bond issuance is expected to account for a higher share of local currency and long-term financing in 2023, driven by public sector participation,” said Albert Park, ADB chief economist.

Public sector participation not only adds to the supply of sustainable bonds but also serves as a model for the private sector, helping to establish a long-term pricing standard for these bonds in the domestic market.”

Vietnam's outstanding government bonds in the first quarter of 2024 increased by only 2% compared to the previous quarter.

ASEAN markets recorded sustainable bond issuance of US$19.1 billion last year, accounting for 7.9% of total issuance in the ASEAN+3 sustainable bond market, compared to the 2.5% market share of ASEAN bond issuance in ASEAN+3.

According to ADB, ASEAN has a higher proportion of local currency financing and longer-term financing in sustainable bond issuance. 80.6% of sustainable bonds are issued in local currency and the average maturity by size is 14.7 years. This is superior to the respective levels of 74.3% and 6.2 years in ASEAN+3, as well as 88.9% and 8.8 years in the Eurozone.

Financial conditions in emerging East Asia improve slightly between December 1, 2023, and February 29, 2024, as the US Federal Reserve is expected to ease monetary policy, while inflation remains moderate and most economies in the region experience stable growth.

Emerging East Asia’s local currency bond market expanded 2.5% in the final quarter of 2023 to $25.2 trillion. Total issuance fell 4.8% from the previous quarter as most governments met their funding requirements in previous quarters. China also saw a decline in corporate borrowing amid a weaker economic outlook.

For Vietnam alone, ADB said that Vietnam's local currency bond market shrank 0.4% from the previous quarter due to a large volume of State Bank bills maturing. There were 360.3 trillion VND (14.8 billion USD) of State Bank bills maturing in the last quarter of 2023, while the State Bank stopped issuing bills in November.

“Vietnam’s government bond outstanding increased only 2% quarter-on-quarter due to lower issuance, while corporate bond issuance increased 6.8% after a decline in the previous quarter,” ADB said.

Government bond yields in Vietnam fell across most maturities between December 1, 2023, and February 29, 2024. In 2023, the State Bank of Vietnam cut the refinancing rate by a total of 150 basis points from April to June, then kept the rate stable since July to support economic growth.

Ha Anh

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