Vietnam’s bond market dwarfed by emerging East Asia countries’

The latest quarterly publication ‘Asia Bond Monitor’ released by Asian Development Bank (ADB) shows that VND-denominated bonds rose to $51.4 billion at the end of March, up 0.7 per cent quarter on quarter (q-o-q). 

The bond market nevertheless decreased slightly by 0.2 per cent on a year-on-year (y-o-y) basis.

Total LCY (local currency) government bonds outstanding, meanwhile, stood at $47 billion at the end of March, with growth of 0.9 per cent q-o-q recorded after contracting 6.1 per cent q-o-q in the preceding quarter. On a y-o-y basis, the government bond market contracted 2.4 per cent after expanding 7.9 per cent in Q4 2018.

The stock of treasury instruments, according to ADB, was the sole driver of growth as the stocks of central bank bills and government-guaranteed and municipal bonds contracted during the review period.

At the end of March, the outstanding amount of treasury bonds reached $40 billion, accounting for an 84.2 per cent share of the government bond stock. Growth of treasury instruments rebounded to 2.3 per cent q-o-q and 9 per cent y-o-y.

The outstanding stock of central bank bills stood at $209.4 million, as the State Bank of Vietnam resumed issuance in March after a 5-month break. The stock of government-guaranteed and municipal bonds stood at $7 billion, down 8.5 per cent q-o-q and 9 per cent y-o-y.

In April, the State Treasury announced that it plans to issue VND80 trillion ($3.42 billion) bonds in the second quarter of 2019. For 2019 as a whole, the government is targeting to issue VND200 trillion ($8.55 billion).

The report of ADB indicates that at the end of March, there were $15 trillion in LCY bonds outstanding in emerging East Asia, up 2.9 per cent q-o-q and 14 per cent y-o-y.

Government bonds accounted for 61.7 per cent, worth $9.3 trillion, of emerging East Asia’s total LCY bond stock at the end of March, an increase of 2.6 per cent q-o-q and 14 per cent y-o-y. Corporate bonds reached $5.8 trillion, with growth decelerating to 3.5 per cent q-o-q but rising 14.2 per cent y-o-y.

China remained the largest bond market in terms of size in emerging East Asia, with outstanding bonds of $11.3 trillion and its share rising to 75.3 per cent at the end of March.

Korea’s LCY bond market was the second largest in the region at $2.0 trillion at the end of March.

The aggregate amount of LCY bonds outstanding among member economies of the Association of Southeast Asian Nations (ASEAN) stood at $1.5 trillion at the end of March. Overall growth inched up to 4 per cent q-o-q in Q1 2019 from 2 per cent q-o-q in Q4 2018. The largest LCY bond markets in ASEAN at the end of Q1 2019 were found in Thailand, Malaysia, and Singapore.

The LCY bond market of Thailand, in particular, expanded to a size of $398.6 billion at the end of March, with growth adding up 1.6 per cent q-o-q in Q1 2019.

The outstanding amount of Malaysia’s LCY bonds totaled $353 billion at the end of March, with growth accelerating 2.9 per cent q-o-q in Q1 2019.

Singapore’s LCY bond market climbed to a size of $309.6 billion at the end of March, as growth rose 4.2 per cent q-o-q in Q1 2019.

The outstanding amount of Indonesia’s LCY bonds, meanwhile, climbed to $216.5 billion at the end of March, with growth of 8.7 per cent q-o-q recorded in Q1 2019.

Emerging East Asia comprises of China, Hong Kong, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam.