With positive developments emerging in the first quarter of 2024, experts and businesses expect the corporate bond market to become more vibrant from the second quarter onwards.
With increased trading activity, banks are resuming bond issuance.
According to data from Saigon Ratings, in the first quarter of 2024, businesses successfully issued approximately 20 trillion VND in bonds, with maturities ranging from 3 to 5 years, a decrease of about 30% compared to the same period in 2023.
Although corporate bond issuance declined compared to the same period last year, there were positive developments. Specifically, the volume of issuance improved significantly month by month. The amount of corporate bonds issued in March 2024 was three times higher than the combined volume of the previous two months.
Public bond transactions reached VND 6,700 billion in March 2024, with average daily liquidity reaching VND 334 billion, an increase of 8.4% compared to February 2024. This is a bright spot for the market.
The majority of new bond issuances in Q1 2024 came from the residential real estate sector. However, from the end of March 2024, banks also began issuing bonds again, with MB participating. From the end of March to the beginning of April 2024, MB issued seven tranches of bonds, totaling nearly VND 2,450 billion, with maturities of 7-10 years, likely to raise Tier 2 capital.
Bond trading on the secondary market has also become more active. According to the Vietnam Bond Market Association, the total value of privately placed corporate bond transactions in March 2024 reached VND 91,120 billion, an increase of 51.8% compared to February 2024. Most of the most actively traded bonds were issued by commercial banks (accounting for over 55% of the total transaction value on the secondary market).
"We expect issuance activity to pick up again in the coming months, especially from Q2/2024," FiinGroup's report stated.
Meanwhile, Mr. Nguyen Dinh Duy, a financial analyst at VIS Ratings, believes that the corporate bond market in March saw many positive developments thanks to improved credit outlooks, a decrease in the value of newly incurred principal/interest arrears, and an increase in debt restructuring and new issuance value compared to February 2024. The fact that some previously delinquent bonds have now been paid to bondholders (such as the case of Hung Thinh Investment Joint Stock Company) also reduced bad bond debt.
While 15% of bonds still face high risk, the market is expected to improve in the second half of the year.
According to the Vietnam Bond Market Association, seven companies announced delayed principal and interest payments in March 2024, totaling approximately VND 4,851 billion (including interest and remaining bond debt), and 27 bond codes had their principal and interest payments extended or their early redemption period granted.
- Mr. Nguyen Dinh Duy, Financial Analyst at VIS Ratings
“We estimate that about 10% of bonds maturing in April 2024 are high-risk (approximately VND 3 trillion), lower than in March 2024. Over the next 12 months, VND 235 trillion of corporate bonds will mature, 15% of which are high-risk bonds,” Mr. Nguyen Dinh Duy estimated.
Statistics from FiinGroup show that the yield to maturity of bonds currently ranges from 6-8% for bonds issued by large banks and 9-12% for non-financial enterprises. Notably, many corporate bond issues are trading at average yields to maturity exceeding 20%, such as those of Sunshine AM (20.18%), Licogi 13 (27.6%), and Bkav Pro (26.79%). This reflects the price decrease of bonds from high-risk enterprises traded on the market.
As of the end of March 2024, there were still 1.24 trillion VND of corporate bonds outstanding, of which 1.1 trillion VND were privately placed bonds. The real estate bond group, with a balance of nearly 400,000 billion VND, received the most warnings regarding its risk due to high inventory, high prices, and stagnant cash flow.
According to Mr. Phung Xuan Minh, Chairman of the Board of Directors of Saigon Ratings, the pressure to repay maturing corporate bonds in the market in the remaining months of 2024 and the following years is very high, approximately VND 210,000 billion in 2024, over VND 305,000 billion in 2025, and VND 220,000 billion in 2026.
“We expect that the gradual improvement of the macroeconomic environment will increase investment activities and the demand for long-term capital mobilization. We also forecast that the bond market will be more vibrant in the coming quarters, the sustained low interest rate environment will support the bond investment channel, and the implementation of Government Decree 65/2022/ND-CP will create conditions for the bond market to develop in a more qualitative, stable, and sustainable manner in 2024,” Mr. Phung Xuan Minh commented.
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