Inflation Concerns Push up Emerging East Asia Bond Yields
Growth in Viet Nam’s local currency bond market accelerated to 8.1% from the previous quarter, increasing
Meanwhile, emerging East Asia's total local currency bond holdings rose 9.1% year-on-year to $23.8 trillion at the end of March.
Bond yields fall on easing monetary policy.
The ADB said bond yields in emerging East Asia fell in the March-May period amid easing inflationary pressures and slower monetary tightening in the US.
Stock markets tumbled, and the local currency weakened slightly against the US dollar between March 1 and June 2, while the risk premium fell.
ADB Chief Economist Albert Park said that most central banks in the region had slowed the pace of interest rate hikes, while the banking sector unrest in the US and Europe has had only a limited impact on regional financial markets.
The Association of Southeast Asian Nations (ASEAN), China, Hong Kong (China), and South Korea are all members of the developing East Asia area.
At the end of March, the region's total local currency bond holdings increased 9.1% yearly to $23.8 trillion.
As a result, corporate bond issuance was maintained at a moderate level, partly due to higher interest rates.
According to the ADB, growth in the sustainable bond markets of rising East Asia and Japan slowed to 5.9% quarter on quarter, with the total value of sustainable bonds reaching $633.9 billion at the end of March.
The highlight of this report by ADB is that the ASEAN+3 region remains the second-largest sustainable bond market in the world, even if the region needs more local currency and long-term financing.
Green bonds, local currency financing and private sector issuance, dominate the sector's sustainable bond issuance.
Some real estate bond defaults in Vietnam
Also, in this newly published report, the Asian Development Bank (ADB) said there had been some corporate bond defaults in Vietnam, especially in the real estate sector.
In a separate assessment of Vietnam's government and corporate bond markets, ADB notes that the expansion in both the government and corporate bond segments has helped Vietnam's overall bond market grow by 5 .1% quarter-over-quarter, amounting to $111.9 billion.
Notably, the activity of corporate bonds increased after the Government relaxed some regulations on bonds, leading to the re-issuance this quarter.
According to ADB, from March 1 to June 2, 2023, government bond interest rates will decrease for all maturities as the State Bank of Vietnam loosens monetary policy to support economic growth and promote financial stability, especially in the real estate sector.
Previously, according to statistics from the Vietnam Bond Market Association (VBMA), as of the date of information disclosure on June 16, 2023, there were 2 separate corporate bond issuances recorded in June with a total value of 600 billion VND.
VBMA said that accumulated from the beginning of the year until now, the total value of corporate bond issuance reached VND 35,213 billion, a deep decrease of about 86% compared to the same period last year.
Including 7 issuances to the public worth VND 5,521 billion (accounting for 16% of the total issuance value) and 24 private issuances worth VND 29,692 billion (accounting for 84%).
