Only 1 batch of corporate bonds issued in April 2023

05/12/2023 07:27 Ha Loan Print article

ANTD.VN - After a bustling March 2023, the corporate bond market in April recorded only 1 individual bond lot worth 671 billion VND.

Issue size plummeted

The bond lot comes from North Star Holdings Joint Stock Company, according to FiinRatings data. The issuance size for the month is only equivalent to 2.5% compared to the previous month and 2.25% compared to the same period last year.

This single bond lot belongs to the real estate sector with a term of 16 months and an interest rate of 14%/year - this is also the highest nominal interest rate recorded since the beginning of 2023.

Only 1 batch of corporate bonds issued in April 2023 photo 1

Corporate bond market quiet in April 2023

FiinRatings data also shows that the size of bonds bought back before maturity in April reached nearly VND 11.3 trillion, down 41.61% compared to the previous month and down 10% compared to the same period in 2022.

Repurchase activities during the month mainly came from the banking group, accounting for 61% of the value of bonds repurchased as of April 2023.

The value of bank bonds bought back by these organizations increased 5.64 times compared to the previous month and 2.42 times compared to the same period last year, coming from major banks such as International Bank (VIB), Saigon Thuong Tin (Sacombank), Vietnam Prosperity Bank (VPBank) and Bank for Investment and Development ( BIDV ).

Most of the TPDN lots (8/12 lots) bought back by banks have a term of 3 years and a remaining maturity of exactly 1 or 2 years (2024 or 2025).

At the same time, as of May 4, the market recorded 98 issuers that were slow to fulfill their corporate bond debt obligations with a total value of VND 128.5 trillion, an increase of 13.6% compared to the last update (April 17).

Circular 03: Only a temporary solution

Recently, the State Bank issued Circular 03/2023/TT-NHNN suspending the validity of Clause 11, Article 4 of Circular 16/2021/TT-NHNN. Accordingly, credit institutions are allowed to buy back unlisted corporate bonds that the credit institution has sold and/or unlisted corporate bonds issued in the same lot/same issuance period as the unlisted corporate bonds that the credit institution has sold.

However, the regulation limits the enterprise whose bonds are repurchased to the highest internal credit rating of the credit institution. According to FiinRatings, most of the issuers have low credit health or credit ratings. Therefore, it is likely that the stated provision will not meet the need to be repurchased from issuers that are currently facing liquidity difficulties.

With the Circular only effective until the end of this year, credit institutions are focusing on resolving the batches of bonds that have/are maturing in the immediate future to relieve debt pressure. Therefore, this is only a temporary solution that does not create real liquidity for the corporate bond market.

It even unintentionally creates a bad precedent for the corporate bond market when banks make payments on behalf of businesses because if the bonds are owned by banks again, it will have the nature of a credit activity instead of a bond activity of the capital market. This increases the short-term concentration risk for the system, but will help stabilize the market in the long term.

Fiin experts said that implementing the regulation on issuing enterprises being ranked at the highest level will face difficulties because there can be many interpretations of this content.

Internal credit ratings are regulated in Circular 11/2021/TT-NHNN and are developed and implemented by banks. However, Circular 03, the highest rating can be understood as the highest score in the internal credit system regulated in Circular 11/2021/TT-NHNN.

"But it can also be interpreted as the highest score in the group of corporate bonds in the unlisted corporate bond portfolio that commercial banks have sold, or the highest score in each industry group in which the issuing enterprise is in that group. Commercial banks will need to have more specific instructions to avoid misapplication," FiinRatings experts commented.

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