VietNamNet Bridge – The government bond market witnessed a record growth in 2013, while the corporate bond market got much bigger in scale.

Thoi bao Kinh te Saigon, which analyzed the information provided by some commercial banks and finance institutions, has found that VND40 trillion worth of corporate bonds was issued in 2013, the figure which is four times higher than that of 2012.

However, analysts have noted that the figure still does not truly reflect the real scale of the corporate bond market. A lot of bond issuance campaigns were not made public in 2013, because the bonds were issued to specific investors.

The bond issuers included VIPD Group, which issued VND7.6 trillion worth of bonds, Vingroup (VND3 trillion), CII (VND1 trillion), Hoang Anh Gia Lai (VND950 billion). All of them are real estate and infrastructure development groups.

The other names were the ones in the banking sector - BIDV (VND3.15 trillion), VP Bank (VND4.5 trillion) and industrial production sector – Vinacomin (VND7.5 trillion) and Masan (VND2.2 trillion).

The issuers offered the interest rates of between 9.8 percent and 15.5 percent per annum for 2-5 year bonds.

The figure of VND40 trillion does not include the Vingroup’s 4.5-year  international bonds it issued in the world market worth $200 million at a relatively high interest rate of 11.625 percent.

The government bond market soared in 2013 thanks to the high demand, especially from commercial banks.

The banks still tried to continue buying more bonds on the last days of 2013, when the State Treasury and the Vietnam Development Bank announced they had fulfilled the yearly capital mobilization plan.

According to the Hanoi Stock Exchange, on December 23, or just one week before the end of the year, commercial banks still joined the auction organized by the Vietnam Bank for Social Purposes and bought VND250 billion worth of bonds, despite the slight interest rate decrease of 0.05 percent to 8.19 percent.

The State Treasury has reportedly issued VND138.395 trillion worth of bond through bidding so far this year. The Vietnam Development Bank has issued VND40 trillion, while the Vietnam Bank for Social Purposes VND7.13 trillion.

BIDV’s research team has noted that the primary bond market has been very bustling recently with the increasingly high demand for 3-year term bonds, which shows the investors’ increased confidence.

The higher confidence has led to the sharp bond interest rate reductions to 7.48 percent and 8.5 percent for 3-year and 5-year term bonds, respectively.

The strong liquidity of banks, plus the controlled inflation rate and the predictions about another difficult year 2014 all are believed to keep the bond demand high.

Meanwhile, the low capital cost and the profuse liquidity would prompt commercial banks to continue pouring money into government bonds, a safe shelter, despite the downward tendency of the interest rates.

The report on the Asian bond market released by the Asian Development Bank (ADB) in late 2013 showed that Vietnam is the fastest growing bond market in the region which witnesses the 18.8 percent growth rate over the last year, reaching $25 billion.

The government bond market saw the 24.8 percent growth rate (to $24 billion). Meanwhile, the corporate bond market had been valued at $700 million by the end of the third quarter of 2013.

TBKTSG