Corporate bond issuance slows in first quarter amid tight credit

According to VIS Rating, the first quarter recorded 17 new corporate bond issuances, with primary issuance reaching VND30.6 trillion ($1.18 billion), up 22 per cent on-year. Real estate issuers accounted for approximately 53 per cent of new issuance, driven largely by a VND10.2 trillion ($392.3 million) bond offering from Marina Centre Investment.

Private and public placements were broadly balanced during the first quarter. In addition to banks, which continued to favour public issuance to access a broader, more diversified investor base, this quarter saw some non-bank corporates, particularly in construction and agriculture, accessing the public bond market.

Credit fundamentals continued to improve, as default rates declined to near zero and recovery outcomes strengthened, led by large real estate and construction issuers. Secondary‑market liquidity remained robust despite moderating after a strong January, while higher yields on stronger‑quality bank bonds reflected the broader upward trend in market interest rates.

VIS Rating noted the ongoing US-Iran conflict is considered as a negative factor for Vietnam’s credit conditions. Elevated energy prices have added to inflationary pressures, limiting room for monetary easing and keeping interest rates elevated, which in turn raises funding costs for both banks and corporates.

If the conflict becomes prolonged, weaker business confidence and investor sentiment are likely to prompt corporates to reassess business plans and defer capital expenditure, thereby constraining issuance appetite and adversely affecting issuers’ ability to refinance through the corporate bond market.

According to data by FiinRatings, Vietnam's corporate bond market has recovered substantially since the disruptions of 2022, with issuance projected to reach VND791 trillion ($30.42 billion) in 2026. However, the recovery has not resolved the market's structural weaknesses. Corporate bond pricing still lacks a credit-quality-based benchmark – most issuance references short-term bank deposit rates rather than a transparent, risk-adjusted yield curve.

Against this backdrop, the regulatory momentum over the past 18 months has been significant. Le Hong Khang, director of Research and Analytical at FiinRatings, pointed out that the amended Securities Law, Decree 245, and Decision 3168 on fund industry restructuring collectively lay the foundation for new investment products, embed credit ratings into the issuance and investment framework, and open pathways for institutional capital to flow into the bond market.

“We expect these reforms to continue and to accelerate,” Khang said. “The next step is building the pricing infrastructure that links credit quality directly to cost of capital, creating a market where both issuers and investors have clear, quantifiable incentives to participate. When that mechanism is in place, the corporate bond market transitions from a policy objective that requires constant intervention into a self-sustaining financial ecosystem. That is when Vietnam's capital market becomes truly prepared for the opportunities ahead.”

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