Vietnam’s bond market records growth of 5% quarterly: report

Wednesday, 2018-11-21 17:04:14
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Vietnam’s bond market sees growth of 5% quarterly. (Representative photo)
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NDO – Vietnam’s bond market registered growth of 5% quarterly and 15.7% yearly to US$53 billion as of the end of September, a reversal from the 1.4% quarterly contraction in the second quarter, stated the latest edition of the Asian Development Bank’s Asia Bond Monitor.

According to the report, the increase was mainly boosted by the 5.2% on-quarter and 14.7% yearly expansion in the government bond market to US$49 billion. The corporate bond market expanded 2.9% quarter-on-quarter and 31.6% year-on-year to US$3 billion.

Unlike most other emerging East Asian bond markets, Vietnam’s third quarter bond yields retreated in line with lower interbank rates and improved liquidity among banks in September. The State Bank of Vietnam is expected to keep interest rates steady for the rest of the year in order to support economic growth and use other monetary tools to curb inflation.

Also unlike other emerging East Asian bond markets, Vietnam’s debt market is not sensitive to US monetary policy tightening, as the bonds are largely held by domestic investors, particularly commercial banks. However, Vietnam’s bond market has been indirectly affected by the US dollar strengthening against most regional currencies.

The report also showed that emerging East Asian bond markets expanded by 4.3% in the third quarter versus the second quarter to stand at US$12.8 trillion at the end of September. The growth rate was faster than the 3.2% pace seen in the second quarter.

The third quarter growth came largely on the back of strong issuance of bonds in China, notably bonds issued by local governments for infrastructure projects. As of the end of September, China had the largest bond market in emerging East Asia with US$9.2 trillion of bonds outstanding, 72% of the regional total, and 5.7% more than at the end of June.