VIETNAM - Strong growth of dong bond market

by lexie Fri Dec 02, 2011 9:01 pm

December 2, 2011

Strong growth of dong bond market

The Vietnam dong bond market in the last quarter recorded growth of a strong 22% against the same period last year to US$17 billion, according to the Asia Bond Monitor of the Asian Development Bank (ADB).

The statistics showed that the domestic corporate bond market surged by 34.5%, while the Government bond market was up by 21.1%.

ADB attributed the growth in the third quarter of the Asian region to the strong development of the corporate bond markets at the rate of 15.4%, whereas the Government bond markets inched up a mere 1.3%.

The third quarter’s bond issuance in the region was worth US$829 billion in total, increasing 7.6% over the second quarter but dropping 19.9% year-on-year because the central banks restricted bond sales given the increased foreign currency inflow.

The issued corporate bonds also dwindled by 24.4% in value against 12 months ago due to the high level of last year’s figure.

Although the bonds in local currencies of the emerging markets in East Asia remained attractive to local and foreign investors, these markets would face more and more challenges, ADB said.

The growth of the regional bond markets has slowed down. Particularly, the total value of bonds in circulation in the region was US$5.5 trillion in September, recording a year-on-year rise of 5.5%, compared to 7.6% at the end of this year’s second quarter.

Iwan J. Azis, head of the ADB’s Office of Regional Economic Integration, said: “Low debt ratio, stable economic foundation and higher yields than the developed markets continue to be contributive factors to the appeal of local currency bonds in Asia.”

Nevertheless, there are still the risks of the increasingly severe instability around the euro zone economies, as well as the declining growth rate of Asian economies and the probability of sudden capital withdrawal.

The profit curves in most markets are moving flat or dipping in some cases, since the policy makers are focusing on growth promotion, not curbing inflation.

http://www.vietfinancenews.com/2011/12/strong-growth-of-dong-bond-market.html#more