Vietnam's sustainable bonds reach $800 million in value

According to the latest edition of Asia Bond Monitor, the total stock of sustainable bonds contracted 0.5 per cent on-quarter at the end of 2024 Q1. The sustainable bond market in Vietnam comprises green bonds and sustainable bond instruments issued solely by corporates and mostly carrying short-term tenors.

More than half (53.4 per cent) of the sustainable bond stock comprised sustainability bonds carrying maturities of 3 years or less, and the remaining 46.6 per cent were green bonds. About 54 per cent of which carried tenors of 3 years or less, resulting in a size-weighted average tenor of 3.2 years. Foreign-currency denominated instruments comprised over 70 per cent of the economy’s total sustainable bonds at the end of March.

Growth in Vietnam’s local currency (LCY) bond market rebounded to 7.7 per cent on quarter in Q1/2024.

The LCY bond market’s overall growth was driven by increased issuance from the government and the State Bank of Vietnam’s resumption of central bank bills issuance in March to support the Vietnamese dong.

Treasury and other government bonds, which accounted for the majority of Vietnam’s total debt stock, grew 3.3 per cent on-quarter in Q1 on increased issuance to support the government’s funding requirements.

Corporate bonds, which comprised 24.8 per cent of the total LCY bond market at the end of March, contracted 0.9 per cent on-quarter due to many maturities and a low volume of issuance during the quarter.

LCY government bond yields in Vietnam rose for all tenors between March 1 and May 31. Bond yields increased an average of 56 basis points due to the United States Federal Reserve’s delay in cutting its policy rate and rising domestic inflation.

A report by the Vietnam Bond Market Association shows that in the first four months of this year, the total value of corporate bond issuances amounted to $1.5 billion and included six initial public offerings and 30 private placements.

The International Finance Corporation (IFC) is providing a financing package of $150 million to Southeast Asia Commercial Joint Stock Bank (SeABank) to catalyse a viable blue finance market, foster green bonds and support smaller businesses in Vietnam.

The Government has assigned the Ministry of Finance to study a proposal to allow the State Bank of Vietnam to guarantee payment of bank bonds, just like with bank deposits.