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According to the ADB, the growth is driven by increased issuances from the government and the State Bank of Viet Nam's resumption of central bank bills issuance in March.

Treasury and other government bonds grew 3.3 percent from the last quarter to support the government's funding requirements.

Corporate bonds contracted 0.9 percent due to a large number of maturities and low volume of issuance, said the bank, adding that the sustainable bond market in Viet Nam reached a size of US$800 million at the end of March.

The market is composed of green bonds and sustainable bond instruments issued solely by corporates and mostly carrying short-term tenors.

Government bond yields rose an average of 56 basis points for all tenors due to rising domestic inflation and the U.S. Federal Reserve's delay in cutting its policy rate.

Viet Nam's year- on-year consumer price inflation inched up to 4.44 percent in May, edging closer to the government's ceiling of 4.5 percent.

The bank said, bond yields in emerging East Asia increased amid strengthened expectations that interest rates will remain elevated for a longer period.

Bond outflows from regional markets reached US$20 billion in March–April. Slower-than-expected disinflation supported the likelihood of higher-for-longer interest rates and pushed up short-term and long-term bond yields in both advanced economies and regional markets./.