Vietnam local currency bond markets grows 3.9% in Q3, yields up
Vietnam’s local currency (LCY) bond market grew 3.9% quarter-on-quarter in the third quarter, driven by the State Bank of Vietnam (SBV) resuming issuance of treasury bills.
To mop up excess liquidity in the banking system and help stabilize the foreign exchange market, the central bank resumed its issuance of T-bills in September (VND93.8 trillion or $3.86 billion) after a break since March 2023.
The Asian Development Bank (ADB) said in its latest Asia Bond Monitor edition that Q3 growth in outstanding government bonds slowed to 1.5% quarter-on-quarter, lower than the 3.3% quarter-on-quarter growth in Q2 due to the low volume of maturities and a decline in issuance.
Despite strong issuance, corporate bonds contracted 3.1% quarter-on-quarter, given the large volume of maturities.

Composition of local currency bonds outstanding in Vietnam. Source: ADB's Asia Bond Monitor, Novemmber edition.
Meanwhile, Vietnam’s LCY government bond yields climbed across all tenors between September 1 and November 10 due to an uptick in inflation and the U.S.Federal Reserve’s decision to keep interest rates at a 22-year high, the ADB note said.
Increased issuance by corporates drove total LCY value up 144.6% quarter-on-quarter to VND198.1 trillion ($8.15 billion) in Q3/2023.
Corporate bond issuance climbed more than threefold in Q3/2023 from the previous quarter. A major factor in this growth was Vietnamese banks increasing their issuance after the government issued two circulars in April which removed some bottlenecks in debt payment rescheduling and bond repurchases.
The banking sector accounted for 59% of the total LCY corporate bonds issued in Q3, with the largest issuance coming from Asia Joint Stock Commercial Bank on aggregated debt sales of VND13.5 trillion ($556 million).
On the other hand, issuance of government bonds contracted 21.6% quarter-on-quarter with some auctions not fully awarded.

Insurance firms and banks remain the largest local currency government bond holders in Vietnam. Photo courtesy of Vietnam Finance Review
As of September, insurance firms and banks continued to hold nearly all outstanding LCY government bonds in the domestic market. Collectively, their bond holdings accounted for 99.6% of the total, up from 99.4% in the same period a year earlier.
Insurance companies remained the single-largest investor group, despite their holdings declining to 59.7% at the end of September from 60.5% a year earlier. Meanwhile, the holdings of banks increased to 39.9% from 38.9% in the same period. Securities companies and investment funds, nonresidents and other investors held a marginal aggregate share of 0.4%.
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