Credit protection for Vietnam has been picking up in recent weeks as hedge funds have been searching for new emerging market plays. "A lot more people are looking at the credit," said a senior trader at a European house. He noted in the last month five-year protection on the sovereign has been quoted regularly, whereas previously markets were made only sporadically, and several trades have gone through.
"There's a lot of real money coming into this space," said a credit head at a bulge bracket house, noting global hedge funds are becoming more focused on emerging market credits such as Vietnam, Indonesia and the Philippines. Five-year CDS on Vietnam has moved in 10 basis points in the last few weeks to 100-106 bps. "It trades pretty tight due to the scarcity of underlying bonds," added the senior trader, noting that only a 2016 dollar issue trades. The credit is rated Ba3 by Moody's Investors Service.
