Green Bonds - A New Driver for Sustainable Capital Market Development in Vietnam 2025

The year 2024 witnessed remarkable growth in Vietnam’s green bond market with several significant milestones. Notably, the active participation of non-financial enterprises contributed to diversifying the supply and elevating the market's quality toward international standards.

The year 2024 witnessed remarkable growth in Vietnam’s green bond market with several significant milestones. Notably, the active participation of non-financial enterprises contributed to diversifying the supply and elevating the market's quality toward international standards. 

I. Current Development of Green Bonds in Vietnam in 2024 

From 2016 to 2024, the total issuance value of green, social, and sustainable bonds in Vietnam reached nearly VND 33.5 trillion (over USD 1.4 billion). In particular, 2024 saw a vibrant resurgence with a total issuance value of nearly VND 6.9 trillion, accounting for 1.5% of the total value of new corporate bond issuances from the beginning of the year. Although the scale of Vietnam's sustainable corporate bond market remains modest compared to regional countries such as Thailand, Malaysia, and the Philippines, with respective estimated shares of 5%, 10%, and 20%, the impressive growth rate of 171% in 2024 highlights the market's tremendous potential. 

Chart 1: Green Bond Issuance Value by Year (2022-2024). Source: FiinRatings 

Notably, there has been a shift in the issuance structure from being predominantly concentrated in the banking and financial sector to active participation by enterprises in diverse fields such as renewable energy, sustainable aquaculture, and infrastructure. This reflects the widespread "greening" trend within the Vietnamese corporate community. 

II. Key Features of Green Bond Transactions in 2024 

The year 2024 marked significant progress in Vietnam’s green bond market, with a total issuance value of VND 6,875.1 billion from four notable transactions. Two leading financial institutions, BIDV and Vietcombank (VCB), contributed a total of VND 5,000 billion, while two non-financial enterprises, I.D.I and Hoa Binh-Xuan Mai Water Supply, executed groundbreaking transactions totaling nearly VND 1,900 billion. 

No.	Issuer	Green Bond Issuance Value	Tenor	Announcement Date	Green Standards Applied	External Reviewers	Domestic Credit Rating
1	Bank for Investment and Development of Vietnam (BIDV)	VND 3,000 billion	5 years	25/09/2024	ICMA	Moody’s	Not applied
2	Vietcombank (VCB)	VND 2,000 billion	2 years	14/11/2024	ICMA	S&P Global Ratings	Not applied
3	International Development Investment Corp (I.D.I)	VND 1,000 billion	8 years	26/11/2024	ICMA	FiinRatings	Not applied
4	Hoa Binh-Xuan Mai Water Supply Co., Ltd. (a subsidiary of AquaOne)	VND 875.1 billion	20 years	28/11/2024	ICMA	FiinRatings	Issuer Rating: BB; Bond Rating: AAA
	Total	VND 6,875.1 billion

These transactions stood out for three main characteristics: 

1. All bonds adhered to ICMA Green Bond Principles and were independently verified by reputable organizations such as Moody’s, S&P Global Ratings, and FiinRatings. 

2. The issuance tenors varied from 2 to 20 years, reflecting long-term capital demands for green projects. 

3. The combination of green certification and credit ratings, as seen in the Hoa Binh-Xuan Mai Water Supply case (Issuer rated BB; Bond rated AAA), enhanced investor confidence. 

Particularly, these green bond issuances attracted significant interest from professional institutional investors such as Eastspring Vietnam, AIA, and Manulife, fostering the adoption of responsible investment standards in Vietnam’s market. 

III. Highlights for 2025 

1. The Role of External Review 

Key competitive features of green, social, and sustainable bonds in Vietnam are shaping the role of external review: 

• International Standards Compliance: Green bonds comply with ICMA Green Bond Principles, independently verified by reputable organizations like S&P, Moody’s, and FiinRatings pre and post ssuance, ensuring transparency and preventing "greenwashing." 

• Investor Confidence: With guarantees from reputable organizations like GuarantCo and domestic credit ratings, green bonds have significant appeal to both domestic and international investors. 

• Tenor Advantage: Green bonds issued by Vietnamese issuers predominantly feature tenors over 5 years, with some reaching 20 years, much higher than the 3-year average. For example, Hoa Binh-Xuan Mai Water Supply recently issued 20-year green bonds, the longest tenor in over a decade, meeting long-term infrastructure investment needs. 

• Competitive and Stable Interest Rates: Green bonds issued by banks typically have interest rates ranging from 5% to below 6%, while those issued by non-bank enterprises range from 3% to below 8%, lower than the market average due to structured designs, credit ratings, and fixed mechanisms that mitigate interest rate fluctuations. 

• Promoting Sustainable Investment Trends: Green bonds meet long-term capital needs, promote sustainable investments, foster a green economy, and enhance market transparency and efficiency, aligning with government orientations and international practices. 

FiinRatings, Vietnam’s first domestic organization that provides  external review services, plays a pioneering role by adopting ICMA international standards. Its services  cover both pre- and post-issuance monitoring of the bonds’ use of proceeds, enhancing transparency, and attracting institutional investor interest. 

2. Emerging Development Trends 

Vietnam’s green, social, and sustainable bond market in 2025 is expected to see positive transformations driven by two main factors: 

• Enhanced Legal Framework: A more robust legal foundation is anticipated in 2025, with clearer incentives and guidance from prior issuers’ experiences. The implementation of the National Green Taxonomy will provide specific directions for businesses and serve as a benchmark for market participants, fostering a synchronized market development aligned with international standards. 

• Growing Investor Demand: Investors are increasingly emphasizing sustainability and social responsibility in investment decisions, driving greater demand for green bonds, which not only generate returns but also contribute to environmental protection objectives. 

The future may witness the introduction of innovative products, such as transition bonds and sustainability-linked bonds, meeting diverse corporate needs during the green transition. Institutional investors, especially insurance companies and investment funds, are expected to increase investments in green bonds, enhancing market liquidity. With the foundations established in 2024 and the growing focus on sustainable development, Vietnam’s green bond market is poised for robust growth, making significant contributions to the country’s sustainable development and carbon neutrality goals. 

_____________________________________________

About FiinRatings 
FiinRatings, a member of FiinGroup and technical partner of S&P Global Ratings, is a licensed credit rating agency under Vietnam’s Ministry of Finance. Our services include credit ratings, green bond verification, and independent evaluations (Second Party Opinion - SPO), catering to issuers, lenders, and investors across diverse sectors in Vietnam. 

FiinRatings’ SPO services provide independent evaluations of financial instruments, policy frameworks, or transactions aligned with principles set by global institutions like the International Capital Market Association (ICMA) and the Climate Bonds Initiative (CBI). Notably, FiinRatings is the first approved verifier for CBI Climate Bond Standards in Vietnam. 

 

« Go Back