Photo: Istock

According to a report by VIS Rating and Credit Guarantee & Investment Facility (CGIF) on July 24, with public funding falling short and bank lending constrained, Vietnam’s infrastructure ambitions hinge on mobilising private capital through the corporate bond market. Between 2025 and 2030, the country will need an estimated $245 billion for expressways, high-speed rail, and power projects, yet public funding can only cover 70 per cent. Private investment has already become a key driver, accounting for over half of registered fixed asset investment.

As bank lending tightens, due to regulatory limits on using short-term deposits for long-term loans, the role of the bond market becomes even more critical. Bank credit to toll road projects, for instance, has declined by 6 per cent annually since 2020. To close the infrastructure financing gap, Vietnam must deepen its corporate bond market and attract long-term private capital.

Indeed, Vietnam’s bond market is gaining traction as a key channel for infrastructure financing. Recent regulatory reforms are paving the way for companies to issue bonds more flexibly, such as through private placements without historical financials under the amended Public-Private Partnership Law. The state is also stepping in with higher equity contributions to ease debt burdens and improve credit quality.

A forthcoming decree is expected to further unlock the market by allowing public offerings and immediate listings of infrastructure bonds. While issuance conditions will be eased, post-issuance controls, such as trustee oversight, escrow accounts, and regulated disbursements, will tighten, creating a more robust legal framework.

Meanwhile, new requirements on disclosure, issuance standards, and mandatory credit ratings are boosting transparency and investor confidence. Together, these reforms position corporate bonds as a more viable, long-term funding tool for Vietnam’s infrastructure ambitions.

The report also indicates that credit guarantees and credit ratings are crucial tools for unlocking private capital for infrastructure development. Infrastructure projects often carry weaker credit profiles due to high leverage, single revenue streams, and exposure to construction risks. Limited track records and restricted access to project agreements further complicate investor assessments. Long tenors, often 15 to 20 years, also heighten liquidity risk.

Credit guarantees provide support to project bond issuers, thereby enhancing credit quality and reducing bondholders’ exposure to project-related risks. CGIF’s regional portfolio, including several infrastructure projects in Vietnam, demonstrates how credit guarantees can support project owners in broadening their investor base and facilitating access to capital markets.

Recent regulatory reforms, along with stronger disclosure, credit ratings, and guarantees, are laying the groundwork for deeper investor participation.