Facebook: @ www.facebook.com/ S Á C H – T À I L I Ệ U T H I T U Y Ể N Trang 1 GRADUATION THESIS Major: Banking and International Finance PROPOSALS FOR DEVELOPMENT OF VIETNAMESE BOND MARKET Facebook: @ www.facebook.com/ S Á C H – T À I L I Ệ U T H I T U Y Ể N Trang 2 Acknowledgement This graduation thesis is the result of thirteen weeks of research and writing during the spring of 2015. It has been an interesting and learning experience. In fulfilling this thesis, I would like to give my special thanks to many people for their significant help, contribution, and recommendations during my writing process. First and foremost, special mentions and grate thanks must go to Mr. Phan Tran TrungDzung, my supervisor at Hanoi Foreign Trade University. With his master knowledge and experience in writing thesis, he has wholeheartedly helped me in writing this thesis. I could not have been able to complete this thesis without his positive suggestions and guidance. Secondly, I would also like to give my heartfelt thanks to the authors who provided me with valuable books for my thesis. My appreciation is to my family and my friends for their supports and encouragements. Gratefulness is to the readers also, whose feedback will help much in improving the thesis. Hanoi, May 2015 Chu Le Thuy Quyen Facebook: @ www.facebook.com/ S Á C H – T À I L I Ệ U T H I T U Y Ể N Trang 3 Contents Abbreviation Content of Tables and Graphs Preface Introduction CHAPTER 1: OVERVIEW OF BOND AND BOND MARKET ............................................. 4 1.1. Overview of bonds....................................................................................................... 4 1.1.1. Definition and characteristics of bond.................................................................. 4 1.1.2. Types of bonds...................................................................................................... 5 1.1.3. Sources of profit from bonds................................................................................ 7 1.1.4. Factors affecting the price of a bond .................................................................... 8 1.1.5. Risks in investing bonds....................................................................................... 9 1.2. Overview of bond market .......................................................................................... 11 1.2.1. Definition of bond market................................................................................... 11 1.2.2. Roles of bond market.......................................................................................... 13 1.2.3. Types of bond trading......................................................................................... 15 1.3. Factors affecting to bond market ............................................................................... 17 1.3.1. Political and economic stability.......................................................................... 17 1.3.2. Legal environment .............................................................................................. 17 1.3.3. Participation of objectives .................................................................................. 18 1.4. Credit rating ............................................................................................................... 18 1.4.1. Definition of credit rating ................................................................................... 18 1.4.2. Function of credit rating ..................................................................................... 18 1.4.3. The importance of credit rating agencies............................................................ 19 CHAPTER 2: OPERATION OF VIETNAMESE BOND MARKET ..................................... 22 2.1. Formation and development of Vietnamese bond market ......................................... 22 2.1.1. Legal framework for the development process of Vietnamese bond market ..... 22 2.1.2