According to the latest report by ADB, at the end of June, the corporate bond stock climbed to VND689.7 trillion on growth of 9.5% q-o-q. Growth quickened from only 4.6% q-o-q at the end of March. The faster growth in outstanding corporate bonds was fueled by hefty issuance volume during the quarter, which totaled VND69.1 trillion for a 120.5% q-o-q hike, on renewed optimism as economic activities normalized and domestic economic growth outpaced expectations.
At the end of June, the outstanding bond stock of Viet Nam’s top 30 corporate issuers totaled VND414.7 trillion, comprising 60.1% of the LCY corporate bond market. Viet Nam’s top corporate bond issuers were predominantly banks and property firms, which collectively held 55.5% of the total LCY corporate bonds outstanding at the end of June.
State-owned Bank for Investment and Development of Vietnam (BIDV) remained the top issuer, with an outstanding bond stock of VND53.4 trillion at the end of June. BIDV accounted for 7.7% of the total corporate bond stock of Viet Nam at the end of Q2 2022.
Corporate bond issuance in Q2 2022 totaled VND69.1 trillion, rebounding during the quarter to rise 120.5% q-o-q after a 74.6% q-o-q drop in the previous quarter, as the strong economic recovery boosted investor confidence. Leading the list were three banking institutions. State-owned BIDV had aggregate issuance amounting to VND12.5 trillion in multiple tranches. Next were Military Commercial Joint Stock Bank with bond issuance totaling VND9.8 trillion in multiple issuances of 3-year, 5-year, and 7-year bonds and Vietnam Technological and Commercial Joint Stock Bank with issuances of VND8.0 trillion.
In Q2 2022, a total of 98 new corporate bonds were added to the corporate bond stock, with issuances coming from 38 corporate firms. The shortest-dated issuance for the quarter was a 1-year bond, while the longest was a 15-year bond. Most corporate bonds issued in Viet Nam carried floating-rate coupons. Most of the new bond issuances came from the banking sector.
Investor Profile
Insurance companies and banks continued to hold the majority of LCY government bonds in Viet Nam. Insurance companies’ share of total government bonds outstanding rose to 58.8% at the end of June 2022 from 57.1% a year earlier. During the same period, banks’ holdings of government bonds slipped to 40.5% from 42.0%. Foreign holdings of government bonds remained minimal at less than 1.0% at the end of June.
The LCY bond market remained dominated by government bonds, which accounted for 70.2% share of the total bond stock at the end of June. The remaining 29.8% share was accounted for by corporate bonds whose share inched up from 29.4% in Q1 2022.
Government bonds. The outstanding size of Viet Nam’s LCY government bond market reached VND1,626.2 trillion at the end of June on growth of 7.4% q-o-q. Much of the growth was contributed by central bank bills, which grew substantially during the review period.
Treasury bonds continued to account for a majority of government bonds in Viet Nam at a size of VND1,385.2 trillion. Growth, however, was marginal at 0.8% q-o-q in Q2 2022 versus 1.8% q-o-q in Q1 2022. The aggressive monetary policy action of the United States Federal Reserve acted as a drag on growth in most regional bond markets, resulting in the weakening of global financial conditions. This led to a decline in issuance in Viet Nam in Q2 2022, as investors sought higher returns. Issuance of Treasury bonds totaled VND27.8 trillion on a decline of 32.6% q-o-q in Q2 2022.
