Bond issuances still a work in progress

Ho Chi Minh City Infrastructure Investment (CII) in late April announced the result for VND1 trillion ($48 million) worth of six-year corporate bond issuance that Vietcombank bought wholly with a fixed coupon rate of 13.2 per cent per annum.

The proceeds will be used to invest in Saigon 2 Bridge project.

Early this year, the country's largest mining firm Vinacomin issued VND2.5 trillion ($119.6 million) worth of bonds coded VNC2013.

The bond term is five years and the yield applied for the first year is 14.5 per cent. All of the bond issuance proceeds are to be used to increase the size of working capital and will be allocated to investment projects.

Many other giants in the real estate sector to issue corporate bonds.

Besides, one big name in the consumption sector also is seeking for capitals through bond issuance, with worth of VND2 trillion this year and the yield applied for the first payment of 11.5 per cent.

Dan Svensson, portfolio manager at Dragon Capital, said the demand for higher yields would stimulate the corporate bond market, but  it was hard to see it kick-off now as the banks were cleaning their balance sheets.

Also the narrow and thin investor basis, no pension funds and the small amount of mutual funds would hold back the corporate bond market for a long time, he added.

Meanwhile, a director of a securities company which is the advisor for many big bond issuances, said some recent big deals were aimed at funding issuers, instead of calling for new capital flow for business and production. That is why the detailed information of the issuance was not public, he said.

"I do not think the corporate bond market has recovered. The issuance is considered a good sign for the market only when it has the nature of a real corporate bond issuance, which depends on issuers' prestige and pledge for investors, instead of their relationship with its debt owner as currently," he said.