INDIVIDUAL ASSIGNMENT

FIM 305

Tran Cong Dinh – FB 90026

I. Definition

A bond is an interest-bearing security that obligates the issuer to pay the bondholder a specified sum of money, usually at specific intervals (known as a coupon), and to repay the principal amount of the loan at maturity

II. Types of bonds in U.S.

U.S. Treasury Direct debt obligations issued by the U.S. government, which uses the revenue from the bonds to raise capital and make payments on outstanding debt

Agency

Debt obligations issued by agencies of the U.S. federal government or by private agencies, called government sponsored enterprises , which are federally chartered, but publicly owned by their stockholders

Municipal Debt obligations issued by states, cities, counties, and other public entities that use the loans to fund public projects, such as the construction of schools, hospitals, highways, sewers, and universities

Corporate Fully taxable debt obligations issued by corporations that fund capital improvements, expansions, debt refinancing, or acquisitions that require more capital than would ordinarily be available from a single lender

High yield Debt securities rated below investment grade2 based on the issuer's weaker ability to pay interest and capital, resulting in the issuer paying a higher rate to entice investors to take on the added risk

2013

Net sales of bonds by private investors holding foreign hit a record high in September to U.S. $ 18.3 billion, the highest level since March 2013.

Japan continues to threaten usurpation China to become the owner of the largest foreign creditors of the U.S.. U.S. Treasury Department yesterday 16/11, said in September, foreign investors remained net buyers of long-term financial assets of America.

Holdings of U.S. Treasuries by China in September rose slightly to $ 300 million 1.155 trillion.

Meanwhile, Japan continues to strengthen U.S. bond purchases in recent months, raising the country's holdings of bonds from 1.123 to 1.131 trillion in September. As such, Japan continued to be the owner 2nd largest U.S. creditors,

In the past 12 months, the U.S. Treasury holdings of China fell by $ 115 billion while Japan's holdings increased by 147 billion dollars in the same period. The reason that Japan buy U.S. debt is strengthened to protect the yen from rising trend, a negative impact on the economy of this country.

According to the financial report of the U.S., foreign investors bought a net 17.3 billion in U.S. bonds and treasury bills in September, lower than the 42.9 billion dollars billion in August. Houses private foreign investors bought a

net 919 million U.S. bonds and treasury bills, compared with 19.2 billion the previous month.

2014

Russian government may be forced to abandon the U.S. bond reserves and refuse to pay bank loans in the U.S., after the Senate Foreign Relations Committee is planning U.S. sanctions against Russia after the estate Council in Ukraine.

Russia is reducing the number of their foreign bond holdings. This is one of the basic ways to reduce the weakening of the ruble. According to statistics, in February, down 2% ruble against the U.S. dollar, the biggest decline in 24 months versus the currencies of emerging markets

III. Vietnam's bond market

The bond market in Vietnam in the early months of 2014 also maintains a lively market on both primary and secondary. In the primary market, more than 25,000 billion State Treasury bonds, government-guaranteed bills and 3.000 billion was released in February. On the secondary market, the total value of bonds traded at nearly 53.000 billion.

Shown in a number of specific major, market size increased, the Government has successfully mobilized about 190 trillion for the State budget, via the issuance of bonds, bills, higher than 20% of the total the release of the 2012. Accordingly, the market size increased by 42% compared to 2012 with approximately 550 trillion of government bonds are listed on the market circulation. Besides, the market liquidity of government bonds is markedly improved, the average sales transaction gains sharply to approximately 1,400 billion / day, almost twice than in 2012. Additionally, the participating active participation of foreign investors accounted for nearly 20% of new issuance in 2013 was also positively contribute to the diversification of the investor base and increase market liquidity.

IV. Orientation for Vietnam bond market 1. Diversifying the investor base - System diversified investor is a key factor in the market, fully consistent with the

objective of developing the primary market and the secondary market. In other countries in the region, participants in the bond market includes various types of investors such as social security institutions, insurance companies, financial institutions

- To attract foreign investors in Vietnam, in addition to a number of tax incentives to encourage them to participate, need to focus on developing in-depth market, product diversification, as well as services on the market investors to help organizations minimize risk when investing in Vietnam.

2. Perfecting mechanisms and policies for the development of market - Potential development of the bond market Vietnam is still very large, therefore,

to unfreeze this market, should improve the mechanism of policy direction: - Develop and promulgate policies and mechanisms for the establishment,

organization and operation of credit rating companies in the domestic market - Develop mechanisms for coordination between the release of Treasury bills and

Treasury bills issued to ensure uniform development of the market and enhance the close coordination between fiscal policy and monetary policy.