Vietnam Bond Market 2025: Exploding Opportunities or Potential Risks?

Vietnam’s corporate bond market has been through a turbulent period since 2022 when a series of defaults and delayed bond payments caused investor confidence to plummet. However, in 2024, the market has seen signs of improvement thanks to policy adjustments and the Government’s efforts to improve transparency.

According to a recent report at the Vietnam Bond and Credit Forum, the total value of newly issued corporate bonds in 2024 reached nearly VND500,000 billion, up 45% over the previous year. According to Mr. Duong Duc Hieu, an analyst at VIS Rating, the participation of banks in guaranteeing corporate bond payments has played an important role in restoring investor confidence. In December 2024, more than 40% of newly issued real estate bonds were guaranteed, compared to only 15% in the previous year.

The strong increase reflects two important factors. One is that investor confidence is being restored thanks to new regulations on information disclosure, payment guarantees and credit ratings. Second, loose monetary policy with lower interest rates reduces the cost of raising capital for businesses, while stimulating demand for investment in bonds.

The bond market is forecast to continue growing in 2025 with three main drivers. The first is legal reform and increased transparency. The government has issued many reform policies to improve the transparency of the bond market, including the amended Securities Law 2024. The new regulation requires all bond issuers to have credit ratings, helping investors assess risks more objectively.

Mr. Nguyen Tu Anh, an economic expert, affirmed that credit rating is an important factor in helping the bond market develop sustainably. Requiring businesses to disclose financial information will help reduce the risk of fraud and increase investor confidence. Thanks to this tight control, businesses with good financial foundations will easily mobilize capital, while weak businesses will be eliminated from the market.

Forecast 2025, bond market will continue to grow

In addition, supportive monetary policy with stable interest rates is also an important factor. One of the driving forces for the development of the bond market is the flexible monetary policy of the State Bank. Maintaining low operating interest rates not only helps businesses reduce borrowing costs but also encourages investors to seek investment channels with higher yields, including corporate bonds. According to a report by VIS Rating, credit growth in 2025 is forecast to reach 16%, higher than that of 2024.

Another important factor is the recovery of the real estate market. This sector, which is an important pillar of corporate bonds, is recovering strongly thanks to the amendment of three important laws: the Land Law, the Housing Law and the Real Estate Business Law. Large real estate projects are restarted, leading to an increase in demand for capital mobilization from the bond channel. Mr. Phan Duy Hung, a financial analyst at VIS Rating, said that policies to remove legal bottlenecks help create a big boost for the real estate market. When confidence returns, businesses will be bolder in issuing bonds to raise capital.

Although the bond market is on the rise, there are still many risks that investors need to consider. One of the biggest pressures is refinancing and corporate liquidity. According to statistics, in 2025, about 70% of corporate bonds will mature, putting great pressure on businesses to refinance to repay debts. Mr. Duong Duc Hieu warned that although cash flow from business activities is improving, many real estate businesses are still having difficulty paying off maturing bonds, especially those with weak balance sheets.

In addition, exchange rate fluctuations and global interest rate pressures are also a worrying factor. If the US Federal Reserve (Fed) maintains higher interest rates than expected, the USD may strengthen, causing foreign capital to withdraw from the Vietnamese bond market. This will reduce the ability of businesses to mobilize capital, especially those with large foreign currency loans.

Another risk is the differentiation between businesses. Businesses with solid financial foundations will have an advantage, while businesses with weak financial health will have difficulty issuing bonds. This can create a “two-speed” market with clear differentiation between business groups.

In general, the Vietnamese corporate bond market is facing an important stage. If it takes advantage of opportunities from legal reforms, supportive monetary policies and the recovery of real estate, this can become an effective capital mobilization channel to help businesses develop sustainably. However, liquidity risks, global interest rate fluctuations and corporate differentiation are still factors that need to be closely monitored. To ensure the stable development of the market, management agencies need to continue to closely monitor and improve the transparency of issuers.