Government bond growth explodes

June 06, 2013 | 08:51

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Vietnam boasted the most rapid government bond growth among regional markets in 2013’s first quarter.

According to the latest edition of the Asian Development Bank’s (ADB) Asia Bond Monitor, Vietnam registered the most rapid year-on-year growth in the government bond market, posting a 64.6 per cent expansion to $29 billion, fueled by heavy issuance of treasury, central bank and state-owned enterprise bonds.

In contrast, the country’s corporate bond market shrank 47.2 per cent to $1 billion.

Emerging East Asia’s local currency bond markets expanded 12.1 per cent year-on-year to $6.7 trillion at the end of March 2013, driven by double-digit growth in corporate bonds, said the report

The quarterly Asia Bond Monitor assesses the bond markets of China, Hong Kong, Indonesia, Korea, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Indonesia had the fastest growing corporate bond market in the region during the first quarter, expanding 26.9 per cent year-on-year to $20 billion, followed by China, which had the region’s largest corporate bond market at $1.1 trillion, up 25.3 per cent year-on-year.

Foreign holdings of most emerging East Asian local currency government bonds continued to rise in the first quarter with yields in the region still more attractive than those in the U.S. and many European markets and on the perception that Asian credit quality is on a par, if not better, compared to advanced economies, said the report.

Foreign holdings accounted for 32.6 per cent of Indonesian local currency government bonds as of end-March, the largest among emerging East Asian economies.

By By Nguyen Trang

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