September issuance hits a record high; VST lowers its 2026 issuance target
- In September, the VST issued VND70.1tn (USD2.7bn) of G-bonds, 2.5x the amount issued in August and the average monthly issuance in 8M 2026. Despite the record issuance, 5Y and 10Y auction yields rose by only 2 bps MoM, suggesting that the market absorbed the increased supply without significant upward pressure on yields.
- In 9M 2026, the VST issued VND299.1tn (USD11.5bn; +17.0% YoY) of G-bonds, while an estimated VND30.5tn (USD1.2bn) matured, resulting in net issuance of VND268.5tn (USD10.3bn; +22.0% YoY). By end-September, the VST had completed 97.1% of its Q3 issuance plan and 74.8% of its revised full-year target.
- In the secondary market, average daily trading value (ADTV) rose 26.8% MoM to VND21.8tn (USD837.6mn), the highest level since 2016. Meanwhile, 5Y and 10Y yields remained broadly unchanged at 4.29% (-1 bp MoM) and 4.47% (+2 bps MoM), respectively.
- The VST lowered its 2026 G-bond issuance target from VND500tn (USD19.2bn) to VND400tn (USD15.4bn) and announced a Q4 issuance plan of VND100tn (USD3.8bn), equivalent to 86% of Q3 issuance. The lower Q4 plan could help ease supply pressure on the bond market.
G-bond yields are likely to hold at high levels in October
- We expect G-bond yields to remain elevated in October, reflecting persistently high domestic interest rates and potential liquidity pressure from maturing OMO repos. Higher US Treasury yields could add indirect pressure. However, the lower Q4 issuance plan and continued SBV liquidity support could help limit further increases in yields.
Interbank rates eased as liquidity improved
- Interbank liquidity conditions improved in September, with the average O/N rate declining to 3.24% from 4.37% in August. Against this backdrop, the SBV allowed OMO maturities to exceed new injections, resulting in a net withdrawal of VND86.7tn (USD3.3bn) in September, compared with a net injection of VND64.7tn (USD2.5bn) in August.
- Looking ahead, stronger credit demand toward year-end and an estimated VND104tn of OMO repos maturing in October could put renewed pressure on interbank rates. Nevertheless, flexible SBV liquidity operations should help contain excessive volatility.
The VND strengthened against the USD for the third month in a row
- USD/VND closed at 25,964 in September – the VND appreciated 0.4% MoM and 1.3% YTD against the USD.
- We have revised our end-2026 USD/VND forecast to broadly unchanged from end-2025, compared with our previous forecast of a 2% increase. A potential US Federal Reserve rate hike and the trade deficit could put renewed depreciation pressure on the VND in Q4, although solid FDI inflows and remittances, together with easing pressure in the OTC FX and domestic gold markets, should offset some of the impact.
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