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Bond market shows "bright spot"

Báo Đầu tưBáo Đầu tư04/03/2024


Although it is not yet considered vibrant again, the corporate bond market has shown signs of improvement, with investors tending to switch to bonds of reputable organizations.

Positive signal

In the report on the issuance results of the HAHH2328001 bond lot issued on December 29, 2023 and ending on February 2, 2024, Hai An Transport and Stevedoring Joint Stock Company (HAH) said that the successful issuance volume was 500 bonds, equivalent to the issuance value of VND 500 billion. The bond lot had 100% participation from investment funds, including Japan South East Asia Finance Fund II LP (JSEAFF); Daiwa-SSIAM VietNam Growth Fund III LP (DSVGF); VietNam Growth Investment Fund LP (VGIF); SSI Fund Management Company Limited.

According to the market analysis report of MB Securities Company (MBS), the cumulative corporate bond issuance since the beginning of 2024 has reached a total value of more than VND 9,400 billion, 3 times higher than the same period in 2023, with an average interest rate of 11.1%, higher than the average of 8% in 2022.

In the near future, there will be two notable issuances: Thanh Thanh Cong - Bien Hoa Joint Stock Company (SBT) will issue 500 billion VND in bonds and Ban Viet Bank (BVB) plans to issue 5,600 billion VND in private bonds divided into 6 installments.

Regarding repurchase activities, from the beginning of 2024 to now, more than VND 6,800 billion of corporate bonds have been repurchased before maturity, down 58% over the same period. It is estimated that for the whole year, there will be more than VND 279,000 billion of bonds maturing, of which the majority are real estate bonds with nearly VND 116,000 billion, accounting for 41.4%.

Previously, in 2023, after a period of "crisis of confidence in the bond market", thanks to the Government 's support solutions, the individual corporate bond market had a "soft landing", with an issuance value of nearly 310,000 billion VND, an increase of 22% compared to 2022. The issuance volume mainly came from credit institutions with a high level of safety, but there were also a number of manufacturing enterprises with the need to mobilize medium and long-term capital to serve production and business.

Some notable large transactions in 2023 came from the VND8,680 billion issuance of Thaco, or Nui Phao Mineral Exploitation and Processing Company (under Masan Group) worth VND3,600 billion. By the end of 2023, the size of the corporate bond market reached 11.8% of GDP and accounted for 9.4% of the total outstanding credit of the whole economy.

Issuance activity has improved sharply in the second half of 2023, with more than two-thirds of the year's issuance value being made during this period. Investor confidence has gradually returned since Decree 08/2023/ND-CP was issued, allowing businesses to extend and postpone bond debt and convert bonds into other assets.

“Bright spot” from institutional investors

Mr. Nguyen Quang Thuan, General Director of FiinRatings, said that many businesses in industries such as infrastructure, water supply, electricity, waste, waste treatment or logistics, consumer goods and manufacturing have plans to issue bonds in 2024. FiinRatings is participating in credit rating or credit assessment of some bond lots with maturities of up to 15 and even 20 years - this is considered a highlight to expect and affirm the importance of the bond mobilization channel in the following years.

In a recent workshop, Ms. Bui Hoang Minh, Head of Investment Analysis and Consulting, Individual Client Division, HSC Securities Company shared that domestic institutional investors, domestic investment funds and self-trading are forecasted to increase disbursement into new investment opportunities. In particular, groups of insurance companies and financial companies often invest mainly in government bonds with reduced yields in a low interest rate environment.

The low interest rate environment is the main factor helping the demand for corporate bond investment to start improving. According to experts from SSI Securities Company, the initial recovery comes mostly from institutional investors, with the criteria that issuing enterprises must have transparent information and clear prospects for debt repayment cash flow. The legality of collateral is also a factor that is carefully considered when institutional investors want to pour money into the bond market. For individual investors, the recovery will be more cautious as these are the ones most affected by the shock at the end of 2022.

The corporate bond market remains an important capital mobilization channel for businesses and the economy with room for growth (the market size is expected to reach 20% and 25% of GDP in 2025 and 2030, respectively, compared to the current 12%). It is undeniable that corporate bonds have been and are a good long-term capital mobilization channel for businesses and an attractive investment channel for investors, especially in the context of low mobilization interest rates forecast to last until mid-2024, and the disbursement demand is still relatively large.

Recently, the pressure of bad debt and bonds maturing in 2024 has made investors cautious in the short term. However, in the long term, the corporate bond market is becoming more transparent and sustainable after changes in legal regulations, bringing positive signals to domestic and foreign investors.

After many changes in the market, investors have gained certain experience and tend to shift to good quality bond issuances. Issuers that meet the transparency requirements in providing information are always given priority in terms of access to full information on financial status and business operations to help investors more accurately assess the debt repayment capacity and risks of the enterprise.

For the corporate bond market to become vibrant again, the biggest factor is still the transparency of the market and the mechanism to support investors in case the bond is late in paying the principal or the issuer has problems. For securities companies, it may be necessary to require additional provisions on compliance with ethics and responsibility when the securities company is both the issuing consultancy and the bond distribution organization.



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