Liquidity of the corporate bond market in vietnam 1

Liquidity of the corporate bond market in Vietnam

Abstract: The paper has proposed three criteria to measure the liquidity of the bond market.

At the same time, the study also collects data and compares it with many countries around the

world. After analyzing and evaluating, the research has pointed out some key points that

cause problems related to liquidity. Finally, the paper proposed a group of solutions, which

emphasized the importance of enhancing information transparency in the market and the

appearance of reputable rating agencies.

Keywords: Vietnam corporate bond market, corporate bond, liquidity

1. Problem statement

Vietnam strives to bring the outstanding debt in the bond market to about 45% of GDP by

2020 and about 65% of GDP by 2030, of which the outstanding debt of the corporate bond

market will reach about 7 % of GDP in 2020 and about 20% of GDP in 2030 (Vu, 2016).

Up to now, the primary market of Vietnamese corporate bonds has recorded increasing

participation of businesses and credit institutions (Vuong and Tran, 2011). However, it is

easy to see the "gloomy" situation of the corporate bond market in recent years. Among the

many reasons explaining this situation, such as the limited access to corporate bond

information for investors, the underdeveloped credit rating system makes it impossible for

investors to be grounded. If bond prices are reasonable, etc., the liquidity of corporate bonds

is both a consequence and a cause of this situation (Vuong and Tran, 2011).

The article uses liquidity metrics for the bond market that are used around the world to

measure the liquidity of the Vietnamese corporate bond market. Calculation results are the

basis for coming to a conclusion about the liquidity of Vietnam's corporate bond market. At

the same time, the article also explains the current liquidity situation of Vietnam's corporate

bond market and proposes some solutions to increase liquidity for the current Vietnamese

bond market.

Research Questions:

1. What is criteria for measurement of liquidity of the corporate bond market in

Vietnam?

2. How these criteria helping out to conclude the situation of liquidity of the

corporate bond market in Vietnam?

2. Liquidity of corporate bonds: Measurement Criteria

There are many indicators used to measure liquidity in the bond market. Below is a summary

of commonly used indicators in the world that the research team has synthesized.