GB market FY26-27F: Steering through fiscal momentum

GB market FY26-27F: Steering through fiscal momentum

We expect government bond issuance in FY26 to increase 10% y/y to VND550tn, supported by record public investment and a higher projected fiscal deficit. Rising issuance pressures are driving yields upward, with 5Y and 10Y tenors revised up to 3.3% and 4.0% for year-end 2025 (previously 3.2% and 3.8%). Yields are projected to rise further to 3.5% and 4.2% in 2026, and 3.6% and 4.3% in 2027, while remaining comfortably below the prevailing policy rate of 4.5%. We maintain O/N interbank rate estimates at 4% for end-FY25 but raise forecasts to 4% (from 3.5% previously) for end-FY26-27, driven by continued strong liquidity demand for credit expansion & FX pressures. SBV continued to provide net OMO injections at extended tenors supporting seasonal year-end demand.