1. Financial Management Name: NGUYEN THI THIEN TAM ( 阮氏善心 ) ID: MA0N0216 VIETNAM BOND MARKET Annuity Commodity

2. A YOUNG AND GROWING MARKET  The Vietnam bond market development was boosted when Vietnam entered WTO in 2006. Total market capitalization is now at 15% of GDP.  > 500 government bonds outstanding on some USD 12 billion  After 2008 foreign exodus the market today is predominantly Vietnamese with a handful of big players. In the absence of mutual funds and pension funds, banks dare key players.

3. A YOUNG AND GROWING MARKET (cont)

4.  Issuers Government bonds: Issued by the State Treasury and authorized issuers such as Vietnam Development Bank (policy bank) Municipal bonds: issued by city municipalities and provincial governments. Corporate bonds: issued by SOE’s and private enterprises THE MARKET  Investors Domestic investor base still small. Ability to absorb supply and demand shocks limited Off-shore investors still limited (no limitation on foreign holdings of bonds)

5. THE MARKET (cont)  Product range ● Mostly plain vanilla fixed coupon bonds ● Pseudo floaters fixed with 12m average deposit rate quoted by 4 big SOCB’s. ● Callable tier 2, convertibles although mostly with mandatory conversion.  Secondary market although on the increase, still thin ● Bond market tend to be very domestic ● At times >100 bps diff between public sources and the market. ● No surprise discrepancy tend to get worse during period of big movements.

6. GOVERNMENT BONDS Source: DC, indicative, as end of August 2009 Government bonds here are State Treasury bonds and VDB (Vietnam Development Bank). Issued institutional debt since 2000. Steady levels of 8.3-8.6% prior WTO. Approximately 500 government bonds outstanding as of August 2009 with an average size of <USD20m equiv. Listed on HNX. Ceiling rates are defined by MOF

7. MUNICIPAL BONDS  Approximately 65 Municipal bonds outstanding with an average size of USD10m equiv.  Only 3 known issuers; Ho Chi Minh City, Hanoi and Dong Nai Province, tightly controlled by central government  Ceiling rates defined by MOF (ca 20-30bps over govvies)

8. CORPORATE BONDS Corporate bonds market has grown rapidly in 2009 due to improvement in legal framework Approximately 70-80 corporate bonds totaling ca USD 3.5bn equiv outstanding. Credit culture will take some time to develop onshore. -No domestic rating service -Only some banks and the government itself have public international ratings at this time

9. Mostly vanilla structures but also some subordinated, callable and pseudo-convertibles have been issued. CORPORATE BONDS (cont)

10. Vietnam has some 23 billion dollars in external debt but only a fraction is tradable commercial debt. By far the most liquid bond is the 6 7/8% Intern’l USD 750 million bond. VIETNAM’S INTERN’L DEBT

11. VIETNAM’S WAY FORWARD Vision: The Government is for the capital market to reach 50% of GDP in 2910 and 70% in 2020. Macro-fundamentals provides good base: GDP growth average 7.5% last 20 years, GDP growth for 2009 at 5.2%, 2010 targeted 6.5%, Inflation less than 7%; Funding needs for cape investment is both in public and private sector Structural improvements: + Additions to existing framework to enhance transparency, predictability, accounting and audit requirements; + Market infrastructure reforms (support from ADB, WB …) in primary and secondary trading (dedicated bond trading platform), depository, settlement; liquidity (buy-back program). + Initiative to set up local rating services.

12. VIETNAM’S WAY FORWARD (cont) Setting up of a new Debt Management and External Finance Department under MOF: centralized Debt Management House under the Public Debt Law with clear roles and responsibility and dynamic risk management. Reaffirm commitment to welcome investors: + Measures to encourages foreign investors and domestic institutional investor base (pension funds, life insurance firms); + Constructive dialogue with SRO – Vietnam Bond Association. 1 st Initiatives includes Market Conventions; Repos market development. Promoting regional initiatives such as ABMI; Welcome additional technical assistance.

13. Thank you