Financial Management
Annuity Commodity
VIETNAM BOND MARKET
Name: NGUYEN THI THIEN TAM (阮氏善心)
ID:
MA0N0216
A YOUNG AND GROWING MARKET
 The Vietnam bond market development was boosted when
Vietnam entered WTO in 2006. Total market capitalization 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.
A YOUNG AND GROWING MARKET (cont)
THE MARKET
 Issuers
• Government bonds: Issued by the State Treasury and
authorized 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)
THE MARKET (cont)
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.
 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.
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 <USD20m equiv. Listed on HNX.
Ceiling rates are defined by MOF
Source: DC, indicative, as end of August 2009
MUNICIPAL BONDS
Approximately 65 Municipal bonds outstanding with an average size of
USD10m equiv.
 Only 3 known issuers; Ho Chi Minh City, Hanoi and Dong Nai Province,
tightly controlled by central government
 Ceiling rates defined by MOF (ca 20-30bps over govvies)

CORPORATE BONDS
• Corporate bonds market has grown
rapidly in 2009 due to improvement in legal
framework
• Approximately 70-80 corporate bonds
totaling ca USD 3.5bn equiv outstanding.
• Credit culture will take some time to
develop onshore.
- No domestic rating service
- Only some banks and the government
itself have public international ratings at
this time
CORPORATE BONDS (cont)
Mostly vanilla structures but also some
subordinated, callable and pseudo-convertibles have
been issued.
•
VIETNAM’S INTERN’L DEBT
• Vietnam has some 23 billion dollars in external debt
but only a fraction is tradable commercial debt.
• By far the most liquid bond is the 6 7/8% Intern’l USD
750 million bond.
VIETNAM’S WAY FORWARD
• Vision: The Government is for the capital market to reach 50% of GDP
in 2910 and 70% in 2020.
• Macro-fundamentals provides good base: GDP growth average 7.5%
last 20 years, GDP growth for 2009 at 5.2%, 2010 targeted 6.5%,
Inflation less than 7%; Funding needs for cape investment is both in
public and private sector
• Structural improvements:
+ Additions to existing framework to enhance transparency,
predictability, accounting and audit requirements;
+ Market infrastructure reforms (support from ADB, WB …) in primary
and secondary trading (dedicated bond trading platform), depository,
settlement; liquidity (buy-back program).
VIETNAM’S WAY FORWARD (cont)
• Setting up of a new Debt Management and External Finance
Department under MOF: centralized Debt Management House
under the Public Debt Law with clear roles and responsibility
and dynamic risk management.
• Reaffirm commitment to welcome investors:
+ Measures to encourages foreign investors and domestic
institutional investor base (pension funds, life insurance firms);
+ Constructive dialogue with SRO – Vietnam Bond Association.
1st Initiatives includes Market Conventions; Repos market
development.
• Promoting regional initiatives such as ABMI;
• Welcome additional technical assistance.