Vietnam to wait for better conditions before its offshore bond sale

what happened

Vietnam's finance minister, Ngo Van Tuan, said on Thursday that conditions for an international bond issue are currently unsuitable, as borrowing costs are very high. He said the country has not dropped the plan and will keep talking with investors, ready to go to market once conditions improve. “We will continue to monitor market developments and maintain engagement with investors,” Tuan told parliament.

According to the minister, elevated US Treasury yields, driven by inflation pressures and supply chain disruptions, would mean higher borrowing costs for Vietnam if it issued international bonds now. Besides raising money for the economy and public investment, government bonds help set a benchmark interest rate on international markets, he added.

Tuan also said Vietnam's current public investment plan is worth about 38,500 trillion dong ($1.5 trillion), roughly 40% of GDP, with around 85% of funding expected from domestic sources and 15% from foreign sources. Vietnam has previously issued offshore bonds three times, in 2005, 2007 and 2014. Reuters reported that the country had been considering its first sovereign dollar bond sale since 2014.

why it matters

For markets, the news means a large emerging-market issuer is staying out of foreign debt for now, while US Treasury yields remain the reference point for borrowing costs. The delay also shows how high US rates are limiting access to funding for developing economies.

market impact

Vietnamese government bonds and the dong: delayed offshore issue, high US yields restrain emerging-market debt.

tags

instruments