The circulation reaching US$29 billion in the first quarter, up 64.6 percent compared to last year, made Vietnam the strongest government bond market in the region, according to the report by the Asian Development Bank (ADB).
According to the latest report on Asian Bond by the Asian Development Bank (ADB), as of March 31st, Vietnam is a country with the highest speed of government bonds issuance in local currencies in the region. This result is mainly due to the promotion of issuance of treasury bills and bonds of the central bank and state-owned enterprises.
However, the amount of corporate bonds issued in Vietnam fell 47.2 percent, to US$1 billion. Meanwhile, Indonesia achieved the highest growth rate (26.9 percent) in the first quarter in terms of this investment channel, with US$20 billion.
In March, the bonds market in local currency in emerging East Asian countries grew 12.1 percent compared to the same period last year, equivalent to US$6.7 billion. The main reason is due to the growth in the double digits from corporate bonds.
Mr Iwan J. Azis, Head of Office of Regional Economic Integration of the ADB, said the bond market could grow even more because investors inside and outside the country feel more secure with debt in local currency in Asia. “The government and businesses can manage debt better than a decade ago,” added Mr Iwan
Quarter report on Asia’s bonds monitoring also made assessments in a number of countries and territories including China, Hong Kong, Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand. Accordingly, in the first quarter of 2013, local currency bond markets in these countries account for larger proportion the economy and reached 54.8 percent of GDP, up 2 percent compared to the same period last year.
Corporate bonds in the region also grew 19.5 percent compared to first quarter of 2012, equivalent to US$2,400 billion at the end of March. In addition, the issuance of government bonds also rose 8.6 percent, corresponding to US$4,300 billion.
The report also shows that the percentage of foreign investors’ holding government bonds listed in local currency at a number of emerging East Asian countries continued to rise in the first quarter. The reason is the interest from these bonds is still more attractive than many markets in Europe and America.
However, according to report, since late 2012, most of the interest rates of government bonds in the region tended to be lower due to low inflation and policy interest rates virtually unchanged. Except for Hong Kong, China, Indonesia and Singapore, government bond yields rose for the period since early 2013 due to concerns about inflation.