(Mr): Phung Xuan Minh, [Chairman of the Board of Directors of PT Group & Saigon Ratings].
As Vietnam enters a phase of accelerated strategic infrastructure investment, the need to mobilize medium and long-term capital is becoming one of the key challenges for the economy. Major transportation, energy, urban infrastructure, digital transformation, and climate change adaptation projects all require substantial, stable financial resources with timelines that match the project’s lifecycle.
Therefore, establishing a separate legal framework forPPP bondsis considered a crucial step in opening up additional long-term capital mobilization channels for project enterprises, reducing dependence on bank credit, and promoting the role of the capital market in infrastructure financing. Beyond creating additional capital channels, PPP bonds also place higher demands on information transparency, credit ratings, payment guarantees, and investor protection mechanisms.
If implemented effectively, this will be an important foundation for unlocking social capital into essential infrastructure projects, contributing to enhancing national competitiveness, supporting sustainable economic growth, and creating new impetus for the development of the Vietnamese bond market in the coming period.
1. The significance of a separate legal framework for PPP bonds
Establishing a separate legal framework forPPP bondsis highly significant because PPP project companies are different from ordinary businesses. These are typically companies established to undertake a specific infrastructure project, with long investment periods, large initial capital, slow cash flow generation, and dependence on the right to operate the project. The draft has approached the issue from a “project financing” perspective, rather than solely focusing on the company’s past profitability.
The key point is that the draft defines PPP bonds as non-convertible, non-warrant bonds with guaranteed payment; the collateral may include assets, business rights to infrastructure projects or systems of the issuer or a third party. This provides a foundation for creating an additional long-term capital channel for strategic infrastructure projects, while still requiring investor protection through payment guarantees, credit ratings, securities firm advice, bondholder representation, and post-issuance listing.
2. Risks when PPP enterprises rely heavily on bank credit.
Over-reliance on bank credit creates three main pressures.
Firstly, there isa mismatch in maturities: banks mostly raise short- and medium-term capital, while PPP projects require long-term capital, which can last 15–25 years or longer.
Secondly, there isthe risk of credit concentration: infrastructure projects often have large total investment amounts, which limits banks due to lending regulations, capital adequacy ratios, and risk appetite.
Thirdly, there isinterest rate risk: when interest rates fluctuate, the financial viability of a PPP project can be directly affected.
The majority of capital needs for PPP projects still come from loans from credit institutions; this puts pressure on the banking system and reveals limitations in terms of maturity matching, risk control, and capital cost volatility. Therefore, developing PPP bonds is a way to share the capital burden with the capital market, especially with long-term institutional investors.
3. Major differences between PPP businesses and conventional businesses when issuing bonds.
The biggest difference lies inthe nature of cash flow and credit profile. Conventional businesses are typically evaluated based on their business history, profitability, assets, operating cash flow, and independent financial capacity. In contrast, PPP project businesses are usually newly established, have a lifecycle tied to a specific project, lack stable revenue in the initial stages, and their ability to repay debt depends primarily on the project’s future cash flow.
The draft acknowledges this specificity by not emphasizing minimum operating time or profitable business results, but instead implementing other control conditions such as: a PPP project contract is required, the total loan amount does not exceed the limit in the project contract, the bonds or guaranteeing organizations must have a credit rating, and the bonds must be guaranteed to pay.
4. The role of payment guarantees and bondholder representation
The requirement for payment guarantees on PPP bonds is a key point to increase market confidence. For projects not yet operational, the draft requires unconditional, irrevocable payment guarantees for the entire principal and interest; for projects already operational, bonds may be secured by assets and/or payment guarantees.
Bondholder representatives provide investors with an entity to oversee and manage collateral assets, monitor payment obligations, handle breaches, and protect collective interests. This is especially important for institutional investors such as insurance companies, investment funds, and pension funds, as they require a clear, transparent, and enforceable risk management mechanism.
In addition, the draft also requires periodic publication of project progress, publication of credit rating results, and extraordinary disclosure within 24 hours when events affect the collateral or solvency.
5. International experiences that Vietnam can learn from.
Vietnam can learn from three groups of experiences.
One approach is to developspecialized infrastructure bondslinked to specific projects, similar to what China and Thailand have implemented for several large-scale projects.
Secondly, developan infrastructure investment fundor a model similar to India’s InvIT to raise long-term capital from institutional investors.
Third, utilizecredit enhancement mechanismssuch as guarantees, credit assurances, blocked accounts, prioritized cash flow for debt repayment, and independent credit ratings.
The Investment Newspaper cites several examples such as China raising funds through bonds for large projects, Thailand issuing bonds for the Eastern Economic Corridor project, and India raising approximately US$13.4 billion through infrastructure investment trusts. These international examples also demonstrate the role of credit ratings, guarantees from development finance institutions, and project revenue as collateral in reducing investor risk.
6. Impact if the legal framework operates effectively
If the legal framework is perfected and implemented effectively, PPP bonds could have three major impacts.
Firstly, expand social resources for infrastructure development, reducing dependence on the budget and bank credit.
Secondly, it provides PPP project businesses with additional tools for long-term capital structuring, suitable for the project’s lifecycle.
Thirdly, promote the in-depth development of Vietnam’s capital market through credit ratings, payment guarantees, bondholder representation, bond listings, and standardized information disclosure.
This tool helps shift some of the infrastructure capital needs from bank credit channels to the capital market, creating more long-term assets for institutional investors, while also encouraging businesses to improve their financial governance standards.
From the perspective of PPP project companies, bonds help diversify capital structure, extend debt maturities, and reduce refinancing pressure.
From the investor’s perspective, this could be a product linked to infrastructure assets, offering long-term cash flow and clear guarantees.
From an economic perspective, PPP bonds contribute to mobilizing social resources for strategic infrastructure projects, thereby supporting growth, regional connectivity, and enhancing national competitiveness.
However, for the market to develop sustainably, PPP bonds should not be understood as a tool to “loosen the standards” for issuance, but rather as a toolto normalize risk. Each issuance needs complete legal documentation, a feasible financial plan, monitored project cash flow, enforceable collateral, and regularly updated credit rating results.
According to Mr. Phung Xuan Minh, Chairman of the Board of Directors of Saigon Ratings, the infrastructure bond market is expected to become an important capital raising channel from 2026 when specific regulations are in place; the participation of insurance companies, pension funds, and institutional investors could create a stable source of long-term capital.
Saigon Ratings [05/17/2026]
Tạp chí diển đàn doanh nghiệp [05/18/2026]
