VN’s local currency bond market witness fastest quarterly growth rate in emerging East Asia

According to the latest quarterly issue of the Asian Development Bank (ADB)'s Asia Bond Monitor, this growth was supported by expansion in both the government and corporate bonds segments.

Viet Nam’s government bond segment grew 9.1% quarter-on-quarter at the end of September 2020 to reach US$54.7 billion—accounting for 83.8% of the country’s total bond stock. 

Corporate bonds, meanwhile, sustained its growth momentum, increasing by 26.9% quarter-on-quarter in the third quarter of 2020 to reach US$10.6 billion. On an annual basis, growth in corporate bonds stood at 129.1% at the end of September this year.

Emerging East Asia comprises China, Hong Kong (China), Indonesia, the Republic of Korea, Malaysia, the Philippines, Singapore, Thailand and Viet Nam.

Local currency bonds outstanding in emerging East Asia reached US$18.7 trillion at the end of September, a 4.8% expansion from June this year and 17.4% higher than a year ago. 

Emerging East Asia’s bond issuance in the third quarter climbed to US$2.2 trillion, up 6.4% quarter-on-quarter and 39.8% year-on-year, as governments borrowed to support large-scale stimulus programs.

As a share of gross domestic product (GDP), emerging East Asia’s bond market rose to 95.6% at the end of September from 91.6% at the end of June. The rising share of bonds outstanding to GDP was mainly due to regional governments’ increased financing to combat the adverse effects of the COVID-19 pandemic.

The latest issue of Asia Bond Monitor features four discussion boxes exploring COVID-19’s impact on global financial markets and capital flow dynamics; financial stability in Southeast Asia; local currency bond markets and exchange rate risks; and the duration of recoveries from economic shocks. 

A special section of the monitor looks at how sustainable finance can contribute to green and inclusive development in the post-COVID-19 era, and a special theme chapter discusses the link between bank efficiency and bond market development.

By Thuy Dung