Vietnam Stimulus Package to Help Expand Bond Market: ADB
The government’s stimulus package will help strongly expand Vietnam’s bond market this year, the state-run Vietnam News Agency quoted forecast of Asian Development Bank’s Asia Bond Monitor in its latest edition.
The same is true for other emerging Eastern Asia markets where governments will issue local currency-denominated bonds to raise fund for financial stimulus packages, ADB said.
The monitor also forecasts that finance companies will turn to domestic markets to refinance or raise fresh funds.
Vietnam posted its fastest quarterly rate of growth in the fourth quarter of 2008 and its economy grew more quickly than other countries for the entire year, the monitor noted.
Vietnam’s VND17 trillion (US$972 million) economic stimulus package will be used to subsidize 4 per cent of the interest rate enterprises pay for their loans and provide credit for small businesses. The government will issue government bond for the project, it said.
However, the ADB warned of risks that increased bond sales could raise yields and make issuance costs higher, while investor worried about fiscal deficits which could hurt government’s credit ratings.
The ADB defines Emerging East Asia as the 10 members of the Association of Southeast Asian Nations plus mainland China, Hong Kong and the Republic of Korea. (VNA, Vnexpress)
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