Market in Focus – Vietnam

GuarantCo, part of the Private Infrastructure Development Group (PIDG), is playing an active role in transforming sustainable infrastructure finance in Vietnam. In particular, the use of onshore Vietnamese Dong (VND) denominated corporate green bonds as a channel for mobilising private capital into critical infrastructure projects.

The development of cross-sector sustainable infrastructure – such as renewable energy, water and sanitation, transportation, agriculture and manufacturing – is a crucial factor underpinning economic development by positioning a market as a fruitful and frictionless place to do business. But even more importantly, access to infrastructure improves lives to ensure market development is both sustainable and equitable.

A growing bond market

Public funding alone cannot meet Vietnam’s infrastructure requirements due to the scale and urgency of the need. Vietnam’s bond market is gaining traction as a key channel for infrastructure financing supported by recent regulatory reforms. However, catalysing private debt for sustainable infrastructure is not always straightforward due to the perceived credit risks.

GuarantCo’s journey in Vietnam on supporting thematic bonds began in 2021, when it hosted a two-day green capital market event funded by a PIDG Technical Assistance grant. The event sought to improve market understanding of green bonds and to address how innovative credit enhancement solutions can be used to effectively manage risk.

The success of the event set the stage for Vietnam’s first-ever green bond being issued the following year by EVF General Finance. The VND 1,725 billion (c. USD 75 million) issuance was enabled by a partial (c. 67 per cent) credit guarantee provided by GuarantCo, with a tenor of 10 years. The proceeds of the bond issuance allowed EVF to provide long-term loans to green infrastructure projects including rooftop solar in accordance with its ICMA Green Bond Principles aligned Green Bond Framework.

This pathfinding transaction led the way for a series of green bond issuances from 2023 onwards by leading Vietnamese financial institutions totalling c. VND 18 trillion. These included issuances from BIDV, VCB, Agribank and HD Bank.

GuarantCo continued its pioneering role in 2024 and 2025 by providing guarantees for Vietnam’s debut corporate green bonds. Firstly, 20-year project bonds of VND 1,190 billion (c. USD 47 million) were used by AquaOne to finance a new greenfield water treatment plant in the Hanoi region. This was the country’s first-ever verified green project bond in the water sector, the longest-tenor project bond issuance in the country to date, and the first project bond in Vietnam to receive an external credit rating from a local ratings agency.

Secondly, eight-year corporate bonds of VND 1,000 billion (c. USD 40 million) issued by IDI Sao Mai supported the development of sustainable aquaculture processing facilities. This was also the first green bond transaction in the aquaculture sector in Asia.

The next frontier: Local credit enhancement facility

With its track record to date, GuarantCo’s transactions have showcased the effectiveness of guarantees as a credit enhancement solution for infrastructure financing. Such guarantees mitigate the risk of credit provision to infrastructure-related projects and companies through third-party credit risk transfer and management.

We see the next frontier as unlocking domestic local currency institutional capital at scale through local credit enhancement facilities.

PIDG, through GuarantCo, has been one of the most active players for local currency guarantees since 2005. To date, we have further successfully developed local guarantee facilities in Nigeria (InfraCredit), Pakistan (InfraZamin), and Kenya (Dhamana). We have also collaborated with an established guarantor in Cambodia (Credit Guarantee Corporation of Cambodia) to expand their mandate into capital markets.

Going forward, we aim to accelerate the rate of deployment of guarantees through the set-up of a dedicated local credit enhancement facility in Vietnam, which will serve the country’s needs in a more responsive and bespoke manner. Over the last two years, PIDG has been working with various stakeholders in the country to develop the Bond Guarantee Company for Vietnam (BGCV) in this regard.

The feasibility, market and technical studies for BGCV have been completed and we have also conducted wider market engagement through technical workshops and seminars to explain the concept and proposal of the BGCV. Based on our initial assessment, we propose that BGCV can be initially capitalised at USD 100 million (c. VND 2.4 trillion). With three times initial leverage, the initial guarantee capacity could be up to USD 300 million (c. VND 7.2 trillion). This would lay the foundations for further scaling in subsequent years.

We are now actively working to engage with government and regulatory agencies to support the establishment of the guarantee company and seek to complete this process in the coming months. Together, GuarantCo and BGCV will continue the pioneering work in innovative credit solutions in the market to support the country’s ambition in green finance and sustainable infrastructure development.