Market Summary

Yield Movements

Viet Nam’s local currency (LCY) government bond yield curve shifted downward between 31 August and 15 October. The downward yield movement was driven largely by a policy rate cut by the State Bank of Vietnam (SBV) on 13 September. Unlike other central banks in the region, the SBV’s move was largely in response to easing monetary policies in advanced economies as opposed to declines in domestic growth. The SBV also noted that the domestic economy remains stable with inflation controlled.

Size and Composition

Viet Nam continued to have the smallest LCY bond market in emerging East Asia, with outstanding bonds of VND1,277.7 trillion (USD55.1 billion) at the end of September. The overall growth of the LCY bond market accelerated to 3.4% quarter-on-quarter in the third quarter of 2019 from 2.6% quarter-on-quarter in the second quarter. On a year-on-year basis, total bonds outstanding grew 1.9%. The outstanding stock of LCY government bonds climbed to VND1,172.5 trillion and corporate bonds reached VND105.2 trillion at the end of September.  

Policy, Institutional and Regulatory Developments

In August, the State Treasury announced its plan to issue VND70 trillion worth of government bonds in the third quarter of 2019. The issuance plan comprises (i) 5-year Treasury bonds worth VND4 trillion, (ii) 7-year Treasury bonds worth VND2 trillion, (iii) 10-year Treasury bonds worth VND27 trillion, (iv) 15-year Treasury bonds worth VND26 trillion, (v) 20-year Treasury bonds worth VND6 trillion, and (vi) 30-year Treasury bonds worth VND5 trillion. The volume of issuance, however, may be adjusted subject to market conditions and the funding needs of the government.