Market Summary

Yield Movements

Viet Nam's local currency (LCY) bond yield curve shifted downward for short-term tenors and upward for medium- to long-term tenors between 28 February and 15 May. The yield decline at the shorter-end of the curve can be traced to the interest rate cuts of the State Bank of Vietnam, while the increase in yields at the medium- to longer-end reflects investors seeking higher returns at the same time the government needs to secure money to finance its socioeconomic development programs to support the economy.

Size and Composition

Viet Nam's LCY bonds outstanding totaled VND1,360.7 trillion at the end of March. The market expanded 9.5% quarter-on-quarter (q-o-q) in the first quarter (Q1) of 2020 after recording a decline in the fourth quarter of 2019. The rebound was entirely driven by the government segment which grew 10.5% q-o-q while outstanding bonds in the corporate sector remained subdued which declined 1.7% q-o-q. Government bonds comprised the bulk of the bond market with a 92.6% share at the end of the quarter versus a 7.4% share for corporate bonds.

Policy, Institutional and Regulatory Developments

On 7 May, the Ministry of Finance issued Circular No. 37, which reduced 20 out of 22 securities fees by 50%. The measure aims to help businesses negatively impacted by the COVID-19 pandemic in line with the government's effort to keep the economy afloat. The reduction will be effective from 7 May to 31 December.