Vietnam’s corporate bond market lacks major factors to catch up with regional peers
The corporate bond market in particular and the bond market in Vietnam in general are quite attractive compared to the Vietnam stock market.
The Vietnam’s corporate bond market lacks two main factors in order to develop itself and catch up with regional countries, according to Viet Dragon Securities Company (VDSC).
First, Vietnam lacks a reputable credit rating agency to help investors obtain reliable information. Secondly, Vietnam still has too few investment funds, mutual funds and other types of large investors.
Singapore, for example, counts many rating agencies following the corporate bond market, including some the world's prestigious rating agencies such as Standard & Poor, Fitch Rating and Moody. Although Vietnam has a few credit rating companies, it will take a really long time to build reputation and build a credible international standard credit rating system.
Meanwhile, individual investors have difficulties entering the corporate bond market due to two main reasons. Firstly, the risk to individual investors will be higher than that of institutional investors because it is difficult for them to diversify their portfolios. Secondly, investment in corporate bonds also requires time and expertise to analyze financial statements of enterprises as information of small and unlisted companies is limited.
Therefore, only institutional investors have the ability to enter the market as these investors often have a department to analyze corporates financial statements. Recently, institutional investors have also begun to pay more attention to the corporate bond market as this is an investment channel that brings stable income and less volatility than Vietnam's stock market. In the past few years, bond funds also had a better results than stock funds.
Although bond funds not only invest in corporate bonds but also Vietnam government bond and valuable papers, the returns of bond funds are better than stock funds, 55.3% or 11.1% per year since its establishment (2013) for bond funds compared with 38.3% or 9.6% per year since its founding (2014) for stock funds.
The corporate bond market in particular and the bond market in Vietnam in general are quite attractive compared to the Vietnam stock market. According to the VDSC, there is a demand for Vietnam’s corporate bond from foreign investors. However, the above limitations, coupled with transparency and language barriers, make it difficult for foreign investors to enter this market. The government sets a goal for the corporate bond market to reach 7% of GDP in 2020 and 20% in 2030.
Nevertheless, VDSC expected that in order to develop the corporate bond market, the number and size of funds needs to grow.
17:51, 2025/01/07
Vietnam prioritizes agriculture and renewable energy for access to green loans
The move is part of the government’s effort to accelerate economic restructuring and build resilience to climate change while protecting the environment.
16:49, 2025/01/06
Vietnam GDP expands by 7.09% in 2024
The 2024 growth rate is considered positive amidst global uncertainties and domestic challenges such as natural disasters.
14:39, 2025/01/04
Vietnam stock market set to accelerate in 2025: Experts
Stable macroeconomic fundamentals, ongoing institutional reforms, and favorable monetary policies will be positive for corporate earnings.
16:31, 2025/01/02
Vietnam stock market aims for emerging status by 2025: Finance minister
By the end of 2024, the benchmark VN-Index reached 1,266.78 points, up 12.11% from 2023.
15:33, 2025/01/02
Vietnam set to extend VAT cut for six months
This measure is expected to accelerate the recovery of production and business activities, which will ultimately benefit the state budget and the economy as a whole.
21:29, 2024/12/31
Vietnam’s credit growth projected to expand by 16% in 2025
Growth must put operational safety first, and channel credit to productive business sectors, priority areas, and growth-driving industries.
- Regional, international financial centers mean boosters to Vietnamese economy: Deputy PM
- IFC sets record with US$1.6 in climate financing to support Vietnam’s green transition
- Vietnam's credit growth up 10% in 10 months
- Building Hanoi's smart city with smart banking
- Vietnam stock market clears major legal hurdle to potential upgrade
- Cashless parking in Hanoi: Good model fuels smart transport