Vietnam’s Corporate Bond Market, 1990-2010: Some Reflections

The Journal of Economic Policy and Research, Vol. 6, No. 1, January 2011

47 Pages Posted: 26 Nov 2010 Last revised: 4 Jan 2011

See all articles by Quan Hoang Vuong

Quan Hoang Vuong

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management; Phenikaa University

Tri Dung Tran

Dan Houtte, Vuong & Partners

Abstract

Corporate bond appeared in 1992-1994 in Vietnamese capital markets. However, it is still not popular to both business sectors and academic circles. This paper explores different dimensions of Vietnamese corporate bond market using a unique and perhaps, most complete data set. State not only intervenes in the bond markets with its powerful budget and policies but also competes directly with enterprises. The dominance of state-owned enterprises and large corporations also prevents small and medium enterprises from this debt financing vehicle. Whenever a convertible term is available, bondholders are more willing to accept lower fixed income payoff. But they would not likely stick to it. On the one hand, prospective bondholders could value the holdings of equity when realized favourably ex ante. On the other hand, the applicable coupon rate for such bond could turn out negative inflation-adjusted payoff when tight monetary policy is exercised and the corresponding equity holding turns out valueless, ex post. Given the weak primary market and virtually non-existent secondary market, the corporate bond market in Vietnam reflects our perception of the relationship-based and rent-seeking behaviour in the financial markets. For the corporate bonds to really work, they critically need a higher level of liquidity to become truly tradeable financial assets. Updated entries in 2010 affirm the findings and conclusions.

Keywords: Vietnam, Corporate Bond, Interest Rate, Transition Economy, Debt Market

JEL Classification: G32, G38, O16

Suggested Citation

Vuong, Quan Hoang and Tran, Tri Dung, Vietnam’s Corporate Bond Market, 1990-2010: Some Reflections. The Journal of Economic Policy and Research, Vol. 6, No. 1, January 2011, Available at SSRN: https://ssrn.com/abstract=1715470

Quan Hoang Vuong (Contact Author)

Université Libre de Bruxelles (ULB) - Solvay Brussels School of Economics and Management ( email )

ULB CP 145/01
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+32-2-6504864 (Phone)
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HOME PAGE: http://www.ceb-ulb.com/vuong-quan-hoang.html

Phenikaa University ( email )

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Hanoi, Hanoi 100803
Vietnam

HOME PAGE: http://sites.google.com/site/vuongqh2019/

Tri Dung Tran

Dan Houtte, Vuong & Partners ( email )

Ha Noi
Vietnam
+84917278078 (Phone)

HOME PAGE: http://vebimo@wordpress.net

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