The State Treasury has successfully raised VND 3.6 trillion through a 10-year government bond issue, with an offering rate of 4.4% and a winning yield of 4.43%. This is the fourth consecutive week that the winning yield has stayed around this level, which is also the highest since 2023.
Government bonds are debt securities issued by a country's Ministry of Finance to raise money for the budget or for specific state-funded programs and projects. Data from the Hanoi Stock Exchange, where government bonds are listed, shows that the winning yield reached 9.6% a year at the end of 2012 before falling gradually to about 2% in 2022.
Although yields have risen recently, Vietnam's government bond rates remain moderate compared with global markets. The domestic 10-year yield is 0.4 percentage points higher than at the start of the year, while yields in developed markets are much higher. In the United States, the government bond yield has reached 5.28%, about 1.1 percentage points above the beginning of the year. The increases in the United Kingdom and Japan are 0.87 and 1.04 percentage points, respectively.
Several experts said Vietnam's government bonds are being pushed higher by different factors and are less sensitive to developed markets. Domestic drivers include strong credit growth, exchange-rate movements, issuance demand and liquidity pressure in the interbank system. In other countries, especially the United States and Japan, fiscal policy, inflation, AI investment and risk premiums are driving yield trends.
Ly Thi Hien, senior head of analysis for the retail client division at Yuanta Vietnam Securities, said the domestic government bond market is being affected by dong liquidity, the investor structure and State Bank policy. Stable interbank liquidity in the short term is limiting the rise in yields, but upward pressure in the final months of the year is almost unavoidable.
"From now until the end of the year, domestic government bond yields are likely to rise slightly, but their fluctuations will probably remain lower than those in global markets," Hien forecast.
Hoang Viet Phuong, general director of S&I Credit Rating Joint Stock Company, agreed that there is little room for government bond yields to cool. The main upward pressure comes from strong borrowing needs for major public investment projects, along with the indirect impact of rising global interest rates. The State Treasury also faces pressure to meet its annual borrowing target of VND 500 trillion, while it has so far reached only a little more than half of that amount.
Last month, the State Treasury offered VND 116 trillion in bonds and sold more than VND 66 trillion, the highest amount since the beginning of the year. This week, the issuer plans to offer VND 15 trillion, with more than half in the 10-year tenor.
A Yuanta Vietnam expert said that, with very large capital needs over the next five years, especially for long-life railway, metro, airport, energy and green-transition projects, the government may diversify its funding sources, including through international bond issuance.
Returning to international markets could open another channel for long-term funding and re-establish a benchmark yield for Vietnam's government. That could help companies and major projects access foreign capital.
Phuong Dong
Sources: VnExpress
