Thirteen commercial banks and securities firms will be allowed to join the debt market or Government bonds (G-bonds) market in Vietnam this year.

Customers visit a Vietcombank branch on Cat Linh Street in Hanoi. The bank is
no longer a market maker in the local debt market from 2020. (Photo: vietnambiz)

According to the Government’s Decree No. 95/2018 / NĐ-CP, three securities firms, nine commercial banks and a member company of Agribank are identified as the market makers of government debt instruments, which are known as G-bonds, government-guaranteed bonds or Government notes.

Compared to 2019’s version, the new list saw the inclusion of Orient Commercial Joint Stock Bank (OCB) and removal of Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank) and Vietnam International Commercial Joint Stock Bank (VIB).

According to the Ministry of Finance (MoF), market makers have to send yearly reports to the ministry for evaluation between November 1 and 10 every year. The ministry will assess the conditions for maintaining the market maker status and announce it before December 31 every year. For market makers who did not meet the conditions, the MoF will send them notices with reasons on why they were removed.

For the three banks removed from this year’s list, however, the MoF has not so far made an announcement.

Joining the G-bond market, market makers have the right to participate in the issuance and repurchase of Government bonds and notes by bidding, to be given priority as the main guarantee organisation for the issuance of G-bonds and other government guaranteed bonds as well as Government debt swaps or repurchase agreements.

They can also participate in discussions and policy making of the bond market.

According to a recent report of the Asian Development Bank (ADB), the local bond market has seen significant changes and steady progress over the past 10 years, adding that Viet Nam’s bond and capital markets have improved significantly as the government continues to initiate reforms and pass enabling legislation.

As of December 31, 2019, the total value of G-bonds and other notes listed on the Hanoi Stock Exchange (HNX) reached more than 1.15 quadrillion VND (49.45 billion USD).