ADB forecasts stimulus will expand bond market

Hanoi (VNA) - The Government's stimulus package will help strongly expand
Vietnam 's bond market this year, forecasts the latest edition of the Asian
Development Bank's Asia Bond Monitor .


The same is true of other emerging Eastern Asia markets, it says.


The monitor also forecasts that companies will turn to domestic markets to refinance
or raise fresh funds.


The monitor notes that Vietnam posted its fastest quarterly rate of growth in
the fourth quarter of 2008 and its economy grew more quickly than other countries
for the entire year.


Vietnam 's 17 trillion VND (972 million USD) economic stimulus package will be
used to subsidise 4 percent of the interest rate enterprises pay for their loans
and provide small businesses with credit.


Much of it will be financed through the issue of Government bonds.


The ADB monitor says emerging East Asia 's domestic currency bond markets held up
well in face of the global financial storm and had continued to expand throughout
2008.


The ADB defines Emerging East Asia as the 10 members of the Association of Southeast
Asian Nations plus mainland China , Hong Kong and the Republic of Korea .


Mainland China 's 2.2 trillion USD in outstanding bonds at the end of 2008
dwarfed the others.


But the ADB warns of risks for the emerging Eastern Asia markets including Vietnam
.


Increased sovereign bond sales could raise yields and make issuance costlier, it says.


Investor worries about sustained fiscal deficits could push up risk premiums and
hurt sovereign credit ratings.


Enterprises would then face greater financing risks and higher borrowing costs and
may get crowded out by higher debt issuance by governments.-Enditem