Green bonds show signs of renewed activity.

Since the beginning of the year, four tranches of green bonds have been issued, demonstrating a resurgence in the green, social, and sustainable bond market.

A more diversified bond issuance structure.

According to FiinRatings' report on the primary bond market in October 2024, the value of issuances in October 2024 decreased significantly compared to the previous month due to a slowdown in bond issuance by credit institutions, reaching 33 trillion VND with 38 issuances, down 41.4% from the previous month but up 1.6% from the same period last year.

This month saw the lowest issuance value since July of this year, mainly due to the slowdown in activity of the market-leading sector, credit institutions, after significant issuances in the previous month to meet the State Bank of Vietnam's Q3/2024 safety ratios. Overall, in the first 10 months of the year, the total issuance value of the entire market reached nearly VND 348 trillion, an increase of nearly 60% compared to the same period last year.

A notable development this past month was the more diversified issuance structure by sector. Bonds issued by credit institutions decreased in proportion to 58%, compared to over 80% in previous months.

Primary market issuance structure, October 2024

In terms of sector structure, credit institutions still account for the highest proportion of issued value. However, this proportion has decreased significantly compared to previous months because many other sectors issued large bond tranches in October, resulting in a relatively diversified sector structure. Some non-banking enterprises that issued large amounts of bonds in October include Vinfast (6,000 billion VND), Vinhomes (2,000 billion VND), and Vietjet (2,000 billion VND).

Corporate bond repurchase activity in October 2024 reached nearly VND 17.5 trillion, a decrease of 14.5% compared to the previous month. The pressure from maturing bonds in the latter part of 2024 reached VND 54.4 trillion and was concentrated in non-financial businesses, especially the Real Estate and Manufacturing sectors.

In October, the non-financial sector doubled its acquisition value, but banks still accounted for 72% of the value in that month.

Four tranches of green bonds have been issued since the beginning of the year.

A report by FiinRatinsg suggests that the requirement for collateral or payment guarantees in the Draft Amendment to the Securities Law will have a significant impact on the supply of bonds to the market if the Draft Amendment is passed and comes into effect.

However, the current draft amendment to the Law only mentions "guarantees by credit institutions" and does not refer to guarantees by international organizations. Meanwhile, the market has witnessed the successful issuance of several green bond tranches by highly-rated international organizations, including CGIF (ADB's trust fund) and GuarantCo (a credit guarantee unit of PIDG Group).

From the beginning of the year until November 20, 2024, four tranches of green bonds were issued under the Green Principles of the International Capital Markets Association (ICMA), totaling VND 6.87 billion, representing approximately 2% of the total issuance value during the period. These bond tranches were all assessed and certified by independent organizations, including FiinRatings, regarding the Green Bond Framework.

This past October saw the issuance of a VND 1 trillion bond by IDI Multinational Investment and Development Joint Stock Company (in the seafood sector), guaranteed by GuarantCo. This was also the first green bond issue by a non-financial enterprise.

Between 2016 and 2023, Vietnam issued approximately US$1.1 billion (nearly VND 27 trillion) in Green, Social, and Sustainable Bonds. Bonds issued by non-bank institutions in this group currently have a modest balance, with issuances from EVNFinance (VND 1,725 billion), BIDV (VND 2,500 billion), Vinpearl (US$425 million), and BIM Land (US$101 million), accounting for 1.8% of the total market value, significantly lower than the 5-7% of regional countries such as Thailand, Malaysia, and the Philippines.

In 2024, with four tranches of green bonds issued, the market is witnessing a resurgence of green, social, and sustainable bonds.

Vietnam is in the process of drafting a framework for classifying green bonds and green credit, but recent green bond transactions have shown more positive signs thanks to the initial basic legal framework and, especially, the voluntary participation of market members. In fact, recent green bond transactions have gradually contributed to improving the quality of goods in the corporate bond market, according to FiinRatings.

Source: https://baodautu.vn/tin-hieu-soi-dong-tro-lai-cua-trai-phieu-xanh-d230581.html