More vibrant corporate bond market anticipated

Figures by Saigon Ratings, the first credit rating agency in the country, show that businesses successfully issued over $830 million worth of corporate bonds in Q1 of this year, with a term from three to five years, down approximately 30 per cent compared to one year ago.

Despite diminished volumes, an apparent improvement was noted in the distributed volumes monthly. Along with this, the distributed volume in March tripled compared to the combined volume in the first two months.

Transactions of publicly traded bonds reached $279 million, averaging $13.9 million a day, up 8.4 per cent compared to February.

The new distributed volume in the first quarter mainly comes from residential property.

However, from late March, banks came back to bond issuance, marked with the participation of military-run MB. Accordingly, from late March to early April, MB embraced seven rounds of issuances with a total value approximating $102 million, with the term from seven to 10 years.

Bond transactions in the secondary market, where investors buy and sell bonds between themselves without involvement from issuing companies, have also been vibrant.

According to the Vietnam Bond Market Association, the total transaction value of corporate bonds through private placement in the secondary market came to nearly $3.8 billion in March, soaring 51.8 per cent compared to February. In which, 55 per cent of the total value came from the banking sector.

Nguyen Dinh Duy, financial analyst at VIS Ratings, assumes that positive changes in March came thanks to diverse factors, such as the reduced value of bonds associated with bad debts, improved rating prospects, debt restructuring and increased value of newly issued bonds compared to February.

That several bonds incurring late payment of yield to bondholders have completed their payment obligations, such as the case with Hung Thinh Investment JSC, has contributed to driving down the bonds associated with bad debt value.

“We estimate that about 10 per cent of bonds facing maturity in April, equal to $125 million, exposes a high level of risk, which is lower compared to March. In the next 12 months, there will be $9.8 billion of bonds facing maturity, with 15 per cent of them highly exposed to risk,” said Duy.

By the end of March, about $51.67 billion worth of corporate bonds were circulating in the market, of which $45.8 billion related to privately issued bonds. This includes nearly $16.67 billion of real estate related bonds, which incur a high risk

Phung Xuan Minh, chairman of Saigon Ratings, revealed that the debt payment pressures from bonds facing maturity in the remaining months of 2024 and beyond were huge, at $8.75 billion in 2024, increasing to $12.7 billion in 2025, and $9.17 billion in 2026.

“We expect the improved macro situation will help bolster investment activities and the demand for long-term capital raising. We also forecast that the bond market will be more vibrant in the quarters ahead as the continued low-interest environment will aid the bond investment channel, and expediting governmental Decree No.65/2022/ND-CP on offering and trading of private corporate bonds will also support a more stable bond market development in 2024,” said Minh.

Real estate rebound anticipated Real estate developers are scaling up efforts to bolster sales in a bid to offset the shortfall earlier in the year.

Corporate bond registration fall below expectations Less than 10 per cent of corporate bonds have been registered on the Hanoi Stock Exchange’s trading platform, falling behind schedule and prompting discussions on extending trading regulations.

Upward trend anticipated in forex rate The forex market faces augmented pressures in the second quarter of this year, which might be contained partially through central bank intervention.