Corporate bond market in dismal Q2 down 92.4% year-on-year

Corporate bond issuance in Q2 decreased by 92.4% compared to the same period last year.

According to VNDIRECT's consolidated report on the corporate bond market, the market remained sluggish in the second quarter of 2023.

In the second quarter alone, only 12 corporate bond issuances were successfully conducted domestically, with a total issuance value of VND 8,736 billion. The issuance volume decreased by more than 69.2% compared to the first quarter of 2023 and by 92.4% compared to the same period last year.

The corporate bond market experienced a sharp decline in Q2 2023 (Photo: TL)

Regarding the volume of corporate bonds repurchased during the period, the banking group repurchased VND 39,842 billion worth of bonds ahead of schedule, accounting for 63.7% of the total value of corporate bonds repurchased ahead of schedule in Q2 2023.

Compared to Q1 2023, the total amount of corporate bonds repurchased by the banking group was only VND 330 billion.

According to VNDIRECT's assessment, the reason could be that credit demand is typically weaker in the early months of the year. In addition, the sharp decline in deposit interest rates and improved liquidity in the banking system have enabled this group to repurchase its bond holdings ahead of schedule.

Many businesses are facing cash flow difficulties and are late in paying interest and principal on bonds.

The decline in corporate bond issuance partly reflects the gloomy picture of this market. Against the backdrop of a continuing sluggish real estate market, many businesses are facing difficulties with cash flow and access to capital. This has led to an increase in the number of businesses that are late in paying interest and principal on their bonds in the second quarter.

Specifically, according to a report by HNX, as of June 26, 2023, there were 59 enterprises on the list of those with overdue payments of interest or principal on corporate bonds. Within this group of enterprises, the estimated total outstanding corporate bond debt reached VND 159.5 trillion, accounting for 14.6% of the total outstanding bond debt in the entire market.

Specifically in 2023, approximately 43.8 trillion VND of corporate bonds from these entities will mature, accounting for 19.6% of the total market maturity value for the entire year.

Source: https://www.congluan.vn/thi-truong-trai-phieu-doanh-nghiep-quy-2-am-dam-giam-924-so-voi-cung-ky-post255680.html