Paving the way for green bonds

The Vietnamese corporate bond market is undergoing a quality-driven transformation as demand for medium- and long-term capital grows. Green bonds are expected to become an important funding channel for sustainable growth, but they still face obstacles ranging from issuance costs to regulatory frameworks.

Supply-demand mismatch and the role of market quality

At the Vietnam Corporate Bond Market Forum 2026 in Hanoi on April 2, 2026, Mr. Kim Eng Tan, APAC Head of National Credit Ratings at S&P Global Ratings, highlighted a pronounced misalignment between supply and demand for long-term capital.

He noted that insurance companies hold substantial long-term capital, but their investment portfolios are mainly concentrated in bank deposits. This, he said, reflects both a shortage of suitable bond instruments and policy and regulatory constraints.

Forum experts also argued that a market operating more deeply, professionally, and sustainably is a prerequisite for reducing pressure on the banking credit system. They added that improving market quality can help attract foreign capital, particularly after Vietnam’s stock market was upgraded under FTSE Russell standards.

Green bonds as a funding channel for Vietnam’s transition

In this restructuring trend, green bonds are positioned as a strategic direction linked to sustainable development goals. Vietnam’s commitment to achieving net-zero emissions by 2050 implies that capital needs for the green transition could reach up to USD 700 billion over the entire period—beyond the capacity of the domestic financial system without external support.

Issuance performance and market share

Ms. Đinh Thúy Hằng, Head of Green Bonds and Sustainable Finance at FiinRatings, said Vietnam’s green bond market remains at an early stage but has shown notable growth signals. She reported that while 2025 issuance volume slightly slowed, the total value of green bonds issued in 2024 reached about VND 10.325 trillion, the highest on record to date, with six issuances.

In 2025, the issuer base for green and sustainable bonds began to diversify, with three of five issuers coming from companies active in green economy sectors such as water infrastructure, plastic recycling, and paper recycling.

Despite these positive signs, green bonds still represent a small portion of the broader corporate bond market, which is over VND 1.4 quadrillion. The share of green bonds is about 0.2% of domestically green-framed bonds and nearly 2% when including international assessments.

According to the forum discussion, the gap reflects that while potential is large, it is difficult to fully realize due to high costs, including advisory and certification expenses and other technical requirements that lead companies to weigh their options.

Funding benefits and investor access

Economists at the forum said that in the long run, the benefits of green bonds can outweigh initial costs. Green bonds provide access to long-term funding of 10–20 years, with competitive issuance yields around 5.75–6.7%. Beyond financing costs, green bonds can help enterprises broaden their investor base.

As ESG investing expands and major financial institutions seek assets that meet sustainability standards, certified and transparent green projects are expected to attract both domestic and international capital.

Challenges: greenwashing risk and capacity gaps

While the market has significant potential, speakers emphasized that green bond issuance is not only a financial exercise but also involves technical, environmental, and regulatory compliance requirements.

Ms. Hằng warned that the risk of greenwashing is a real concern, especially because supervisory and reporting systems are not yet fully aligned. She also said many firms lack internal capacity to implement ESG, requiring cooperation across industries, including finance, technology, environmental science, and legal frameworks.

Roadmap for issuers and long-term outlook

Ms. Hằng described green bonds as strategic tools rather than purely financial products. Given the scale of capital needed for the green transition, she said the domestic market alone is unlikely to meet demand without linking to foreign capital.

She recommended that issuers build a systematic roadmap: selecting experienced partners, ensuring transparency aligned with international standards, and developing internal capabilities in sustainable finance.

In the long run, as legal and operational standards become normalized and reporting becomes more transparent, green bonds could serve as a bridge between Vietnam’s development needs and global sustainable investment flows.