32
Despite the positive results mentioned
above, the overall size of the government bond
market is still small, the investor structure
needs to continue to improve; liquidity of the
secondary government bond market at some
time is limited; There is no system of market
makers with full rights and obligations under
international practice; Some new products have
been researched but not yet implemented.
Prospects of the government bond market
in 2018
Many forecasts have shown that the
macroeconomics in 2018 will be stable,
forecasting that the economy will continue
to grow. The positive impact of the global
economy and global trade will help promote
domestic exports; Vietnam’s position has been
improved following the success of APEC 2017,
domestic industrial production has grown, and
investment environment has been improved.
For thefinancialmarket, 2018 is anopportunity
to attract foreign investors to invest in the
capital market and bond market. In addition to
the advantages, the domestic financial market
also faces some difficulties and challenges from:
(i) Federal Reserve increases interest rates; (ii)
pressures from exchange rates and inflation.
In this context, in order to develop the
government bond market in 2018 and the
following years, it is necessary to implement the
following contents:
Firstly,
building and developing of the
government bond market is consistent with
the level of economic development, in sync
with other components of the financial market,
Thirdly,
in terms of government debt
portfolio management: The portfolio of
government bonds in 2017 was restructured in
terms of volume issue, term issue and interest
rate issue, contributing to the sustainability of
the government debt portfolio. The domestic
bond market was stable and could mobilize
long- term capital with lower cost. It made
advantageous conditions for the Government to
raise capital from the domestic market cheaper
than from the foreign market. Accordingly,
the Government’s domestic borrowing became
a major source of funds, accounting for 61%
of the total government debt, in line with
the Government’s borrowing and repayment
strategy up to 2020.
Fourthly,
investor structure continued to
improve positively, reflecting an increase
in the holding rate of government bonds of
insurance companies, the social security fund
and investment funds, reducing the holding rate
of commercial banks. The structure of investors
holding government bonds has changed
substantially, the proportion of government
bonds held by commercial banks down from
77% in the early 2016 to 53.7%, increasing the
proportion of long-term investors up from 23%
in the early 2016 to 46.3%.
Fifthly,
government bonds trading on the
secondary market: In 2017, bond trading volume
and Government-guaranteed bonds were VND
8.863 trillion/session, 42% higher than in 2016 in
average. Outright trades were 4,587 billion VND
/ session, 17% higher than 2016 in average. Repos
trading was 4,276 billion VND, 82% higher than
2016 in average.
2016
2017
Corporate bonds
Total: 36.9%
Total: 37.45%
Government bonds
Government guaranteed bonds
Local government bonds
Corporate bonds
Government bonds
Government guaranteed
bonds
Local government bonds
FIGURE 1: BONDS MARKET SIZE 2016-2017 (%GDP)
Source: Banking and Finance Department (Ministry of Finance)
