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Vietnam’s bond market sees mild contraction in Q4 2023 – ADB report

The Saigon Times

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HCMC – Vietnam’s bond market saw a 0.4% quarter-on-quarter contraction in the fourth quarter of last year, according to the Asian Development Bank (ADB).

The Asian Bond Monitor report, which was released on March 21, said that a total of VND360.3 trillion of central bank securities fell due in Q4 2023, coinciding with the State Bank of Vietnam (SBV) halting securities issuance on November 9.

This decision aimed to address the surge in overnight interbank interest rates, indirectly stabilizing the foreign exchange rate amidst adjustments in the banking system’s short-term liquidity.

While outstanding G-bonds grew by 2.0% quarter-on-quarter, down from 2.6% in the previous quarter, corporate bonds saw a rebound.

Corporate bonds outstanding recorded a 6.8% quarter-on-quarter increase in Q4, compared to a 2.9% decline in the previous quarter, attributed to improved investor sentiment following reforms, prompting issuers to re-enter the market.

Total bond issues surged by 81.6% quarter-on-quarter in Q4 2023, fueled by heightened issuance from both corporates and the central bank. Corporate bond issuance expanded by 72.1% quarter-on-quarter to VND92.6 trillion, with the banking sector remaining the primary issuer, accounting for 64.6% of all corporate bonds issued.

Orient Commercial Joint Stock Bank emerged as the top issuer during the period, with total debt sales totaling VND9.3 trillion.

To manage short-term liquidity and support the Vietnamese dong, the SBV boosted securities issuance in October, at VND225.3 trillion, more than double the volume issued in September. In contrast, G-bond issuance contracted by 43.5% quarter-on-quarter in Q4 2023, as the State Treasury of Vietnam reduced issuance while closely monitoring market dynamics for effective debt servicing.

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