Compiled by Thu Hà

HÀ NỘI — As Việt Nam enters the largest infrastructure development phase and needs hundreds of billions of US dollars for infrastructure investment, State budget and bank credit are limited.

Analysts believe that infrastructure bonds will become a new pillar of long-term capital for national projects.

Analysts of VIS Rating, an affiliate of Moody’s, estimate that by 2030, Việt Nam will need about US$245 billion for highways, railways, renewable energy and transmission infrastructure. However, public investment capital can only meet about 70 per cent of the demand, while the banking system - the main funding channel - is facing clear limitations.

Maturity pressure makes it difficult for banks to pursue long-term loans of 15-20 years. Besides, Basel III international banking standards require banks to maintain higher equity capital to reduce risks, causing costs for bank credit for long-term projects and construction risks being always high in the early stages.

Director and senior expert of VIS Rating, Dương Đức Hiếu said that bank credit used to be the key source of funding for infrastructure projects.

However, in the past three years, outstanding loans for transport have decreased by an average of 10 per cent per year, reflecting the trend of tightening compliance with capital safety indicators, especially limiting the use of short-term capital for medium- and long-term loans, according to Hiếu.

When the funding room is narrowed, banks cannot continue to shoulder the majority of capital resources for projects with payback periods lasting decades.

The State budget still plays a pivotal role but is no longer able to aid all investment needs. The official development assistance (ODA) capital from developed countries or international organisations for developing or underdeveloped countries, which once played an important role in the early stages of reform, has also significantly decreased.

Meanwhile, the target of high GDP growth and the need to develop modern infrastructure require a more diverse and stable long-term capital structure.

According to Hiếu, in that context, infrastructure bonds are considered a new pillar alongside the State budget and bank credit.

The completion of the legal framework after the volatile period of 2021-2022 has created a more transparent foundation, reduced systemic risks and strengthened investor confidence, which is an important condition for the bond channel to return to its role as a long-term capital leader.

The popular model in the world, especially in energy and transport projects, is to use bank loans in the early stages, when construction risks and investment costs are high, and switch to issuing long-term bonds after the project is in stable operation.

In Việt Nam, the demand for infrastructure bond investment is assessed to be very large. The total asset value of bond funds has doubled compared to the crisis bottom in 2023. However, many fund management units say they do not have enough products to buy, when most of the portfolio still has to be placed in bank bonds or certificates of deposit.

In addition, life insurance groups, pension funds and institutional investors, which own long-term capital sources of 15-20 years, are also lacking suitable products.

The Ministry of Finance has recently proposed allowing the insurance sector to buy recapitalised bonds and restructure debts, opening up a large space for the market in the future.

“The potential demand for infrastructure bonds is huge. When the new policy is activated, the market will accelerate strongly,” Hiếu said.

Infrastructure bond fund

The bond market is entering a period of comprehensive restructuring. New requirements, such as credit rating, transparency of records and strict auditing, will help reduce systemic risks, increase investor confidence, and direct capital flows back to quality projects and good cash flow.

Experts say that infrastructure bonds will emerge as a spearhead, when real estate projects – a sector that used to account for a large proportion – are being tightened; while the trade, service and infrastructure sectors need long-term capital that banks find difficult to meet.

On this basis, the formation of an infrastructure bond fund is considered a necessary step to raise private capital for national projects. This fund is expected to be a closed-end fund and issue listed certificates, helping investors trade flexibly while maintaining a stable capital scale.

At least 65 per cent of the fund's net asset value will be invested in safe infrastructure bonds, government bonds or deposits.

Statistics in the first 10 months of 2025 show that the total value of corporate bonds issued reached VNĐ482 trillion, but 69 per cent of which belonged to banks, while infrastructure and real estate only accounted for 23 per cent, clearly reflecting the imbalance between infrastructure capital needs and actual mobilisation.

The launch of the infrastructure bond fund is expected to regulate this capital flow, channel capital resources to key projects and meet long-term investment needs.

Despite the huge potential, infrastructure bonds do not mean absolute safety.

Lawyer Lê Thị Nhung, Director of law firm L&A Legal Experts, said that risks mainly focused on project quality, implementation progress, financial plans and the ability to ensure cash flow.

To minimise the risks, Nhung proposed to develop a set of independent and transparent appraisal criteria; prepare separate risk reports for each project; regularly disclose information on progress, changes in total investment and capital use; and apply mandatory credit ratings to large issuances.

If designed correctly, this mechanism would help individual investors access infrastructure bonds more safely, while creating a basis for sustainable development of long-term infrastructure projects.

The infrastructure bond fund could act as a professional ‘filter’ if properly designed, helping individual investors access long-term products with controlled risk, Nhung said. — BIZHUB/VNS