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.
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
Name: NGUYEN THI THIEN TAM (阮氏善心)
•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
•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)
●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.
●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.
Source: DC, indicative, as end of August 2009
•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)
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 and70% 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
+ 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).
+ Initiative to set up local rating services.
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. 1stInitiatives includes Market Conventions; Repos market development.
•Promoting regional initiatives such as ABMI;
•Welcome additional technical assistance.