Bond Market Association debuts in Hanoi

The Vietnam Bond Market Association (VBMA), the first of its kind in Vietnam created to boost the bonds market and promote debt instruments, will hold an opening ceremony in Hanoi.

VBMA is actually a restructuring of the Vietnam Bond Market Forum with more power and a more important role in regulating the market, said Do Ngoc Quynh, a member of the board lobbying for the establishment of VBMA. He added that the association bore the responsibility of bonding its members and constructing a legal framework to boost the healthy development of the domestic bond market.

Quynh told the Daily that VBMA was also in charge of setting up the standardized interest rate curve for the domestic bond market, thus setting up a frame for bond trade and applying international rules that are fit for the market.

VBMA will start work on building a code of ethics in bond trading on the domestic market. It will also provide standardized training programs about the market and be a bridge between it and state management agencies.

Initially, the association has 58 members, 34 of them local banks, securities companies, insurance firms or financial institutions and the other 24 foreign-owned financial institutions or joint ventures operating in Vietnam.

(Source: The Saigon Times Daily)


The VBMA has signed a memorandum of understanding with the World Bank’s International Finance Corporation to introduce international best practices into Vietnam’s bond market so that more money can be raised for major public works and other pressing needs.

Simon Andrews, International Finance Corp. regional manager for Vietnam, Cambodia, Lao PDR and Thailand, comments on the development of Vietnam’s bond market.

On what’s needed:

“There are a few key steps on the way to a fully functioning and efficient bond market in Vietnam. First, IFC is working with the Vietnam Bond Market Association to establish market practices and standards, codes of conduct, standardized agreements etc.

“Second, a series of bond issues that establish a solid yield curve will be an important step in establishing the benchmark for pricing.

“Third, ratings of bonds need to be established that allow investors to assess the credit profile of a particular issue and that will qualify certain issue as investment grade. Establishing a yield curve and a reliable ratings system will take time as these are iterative processes.

“Fourth, an efficient and transparent secondary market should develop that provides liquidity and pricing visibility.”

On challenges:

“Vietnam continues to grow quickly and its capital formation requirements are expected to quadruple over the next six-seven years. It would be a challenge for any banking system to keep pace with such growth in demand for capital simply through growth in deposits and non-traded bond issuances and so the further development of the traded bond market is expected to be an important source of capital raising for Vietnam’s economy.

“In addition, through the bond market, borrowers should be able to access longer maturities that are generally available from traditional sources.”

On the outlook:

“The bond market in Vietnam is currently at an early stage and I expect that as we continue to build the framework for the standards and practices of the market and we begin to see issues from the strongest borrowers with increasing liquidity, we will begin to see increased interest in Vietnamese issues and the development of yield curves and benchmarks.”

(Bloomberg)
(Source: thanhniennews.com)