Bond market remains in a modest shape

Upgrading the sovereign credit rating, developing a bond guarantee fund, and enhancing bond valuation services are pivotal solutions to unlock the corporate bond market and mobilise long-term capital for growth.

- By Ha Truc

According to data released by the Vietnam Bond Market Association in mid-March, the market recorded only one private placement worth $3.18 million and three public offerings totalling $132 million as of the end of February.

In total, during the first two months of the year, private placements reached $10.8 million, while public issuances amounted to $329 million. These issuance levels remain significantly low compared to previous periods, indicating that capital mobilisation through the corporate bond channel has yet to show a clear recovery.

Nguyen Ba Hung, principal country economist from the Asian Development Bank, noted that Vietnam’s bond market size relative to GDP remains relatively modest compared to regional peers, suggesting substantial room for expansion.

“Currently, about two-thirds of the bond market consists of government bonds, while corporate bonds account for only one-third, equivalent to roughly 10 per cent of GDP. This structure indicates that the role of the corporate sector in raising capital through the bond market remains limited,” he added.

Another notable issue is the relatively low level of secondary market trading compared to other countries in the region. According to Hung, this exposes investors to higher liquidity risks, thereby reducing the market’s overall attractiveness.

“On the issuer side, approximately two-thirds of corporate bonds are issued by banks, with a significant portion also coming from the real estate sector. This suggests that bond capital remains concentrated within the financial intermediation sector, rather than being broadly channelled into productive industries,” Hung said.