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Friday, July 19, 2024

Sluggish recovery persists in corporate bond market

By N. Tan

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HCMC – Corporate bond issuance had dropped a staggering 78% as of July 28 compared to the same period last year, according to data from the Ministry of Finance.

The outstanding volume of privately-placed corporate bonds currently stands at VND1.02 quadrillion, equivalent to 10.8% of the country’s GDP in 2022, accounting for 8.2% of the total outstanding loans in the economy.

Real estate companies have been the primary issuers of corporate bonds, followed by banks, with a combined value of VND62.3 trillion from 36 issuing organizations since the beginning of 2023.

In response to market volatility, companies have chosen to repurchase their corporate bonds before their maturity dates, aiming to restructure their capital sources. According to the Ministry of Finance, the total volume of these repurchases reached VND135.3 trillion, a significant 56.3% increase over the previous year.

During a hybrid conference on the implementation of Resolution 33 chaired by Prime Minister Pham Minh Chinh on August 3, the ministry stressed the importance of stabilizing and promoting the corporate bond market.

To achieve this, the ministry plans to refine the legal framework and regulations, strengthen market supervision, and implement measures to encourage public bond offerings for eligible companies.

However, individual investors have taken a cautious approach, expressing concerns about the risks associated with corporate bonds distributed by banks. As a result, the issuance of new bonds by companies has slowed down.

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