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Saturday, June 15, 2024

Corporate bond market remains subdued

The Saigon Times

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HCMC – The corporate bond market has stagnated, with new issues taking a nosedive to a mere VND14.8 trillion year-to-date.

Despite a 2.4 percentage point increase in average coupon rates to around 10.7%, new bond issuance has plunged by a hefty 50% year-on-year.

Data from MB Securities JSC showed that from March 1 to 21, only two bond issues were launched, with a total value decreasing by 86% year-on-year to VND3.7 trillion.

While real estate firms remain the primary issuers, their bond issuance has dropped to VND6.4 trillion from the VND24 trillion issued a year ago.

Meanwhile, the construction and building materials sector emerged as the second-largest issuer, with VND5.8 trillion, a fivefold increase over the same period last year.

The secondary market for corporate bonds also reflects subdued activity, with repurchase activities experiencing a downturn in March. The estimated value of bonds repurchased before maturity plummeted by 87% to VND2.5 trillion against the previous month.

The volume of bond buybacks since January totaled VND13.1 trillion, down by 64% year-on-year.

Despite policy measures allowing for debt restructuring and bond-for-property swaps being extended into 2024, challenges persist. Vietnamese corporations are facing a wave of maturing bonds in 2024, with an estimated VND200 trillion falling due. The real estate and banking sectors account for a combined 66% of these upcoming maturities.

VND74 trillion and VND52 trillion in corporate bonds will fall due in the second and third quarters, respectively.

Currently, the total value of overdue corporate bond payments stands at VND193.6 trillion, comprising nearly 19% of the total corporate bond debt in the market, with the real estate sector representing the largest proportion, around 70%.

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