Corporate bonds recover with 443,000 billion, which bank issues the most?

In 2024, the Vietnamese primary corporate bond market recorded a total issuance value of VND 443,000 billion, a significant increase compared to VND 311,240 billion in 2023.

The real estate market will still face many difficulties in 2024 - Photo: TU TRUNG

Despite the large amount of money raised, banks still hold the leading position with the value of corporate bond issuance reaching nearly 300,000 billion VND, indicating that the recovery of the real estate sector and other areas still has much to be discussed.

Speaking to Tuoi Tre newspaper , experts said that the above figures reflect the difficulties businesses face in accessing long-term capital and the continued high level of financial pressure.

The bond market, which was expected to ease the burden on banks, has now become a channel where banks borrow and then lend to businesses.

Why are banks issuing bonds in such large numbers?

In its 2024 corporate bond report, Fiinratings – a Vietnamese credit rating agency – stated that the Vietnamese primary corporate bond market experienced a strong surge, with total issuance value reaching VND 443,000 billion. This is a positive sign, reflecting the strong appeal of this capital raising channel.

However, according to Fiinratings, the banking sector still holds a dominant position with an issuance value of nearly 300,000 billion VND, accounting for 67.1% of the total market.

"The dominance of banks not only demonstrates financial strength but is also a crucial driver of economic recovery," Fiinratings assessed.

The real estate sector saw a significant decline of -18.7%, with issuance maturities shortened to 2.65 years from 3.72 years in 2023 and coupon rates rising to 11.13% from 10.93% the previous year.

According to the report's publisher, these figures reflect the difficulties in accessing long-term capital and the significant financial pressure faced by real estate businesses in the context of a market that has not yet fully recovered.

According to MBS's compiled data, some of the banks with the largest corporate bond issuance values ​​from the beginning of the year to date include:ACB (36,100 billion VND), HDBank (30,900 billion VND), Techcombank (26,900 billion VND)...

Mr. Nguyen Quang Thuan, chairman of Fiinratings, said that looking at the structure of corporate bond issuance in 2024, banks dominate while bonds raised directly for production and business activities remain very limited at 145,000 billion VND.

Furthermore, the capital raised through stock issuance on the stock market, reaching 75,000 billion VND, was mainly from bank and securities stocks.

"The mobilization of medium and long-term capital for investment by the private sector is still too limited; we cannot rely solely on FDI forever. This poses a challenge to Vietnam's goal of achieving 8% economic growth in 2025 and the coming years," Mr. Thuan commented.

Associate Professor Dr. Nguyen Huu Huan, a senior lecturer at the University of Economics Ho Chi Minh City, said that banks are significantly increasing bond issuance to stabilize their capital sources.

"Deposit interest rates are gradually rising, making bond issuance more preferred due to its stability. Even though deposit interest rates are higher than bond interest rates, the longer maturities of 5-7-10 years compensate for this, eliminating concerns about withdrawals and inflows affecting liquidity, allowing banks to proactively manage their capital sources," Mr. Huan said.

Explaining why the manufacturing and business sector is "absent" from the bond market, Mr. Huan said that this channel mainly targets businesses that want to raise medium and long-term capital, such as real estate and energy companies.

Meanwhile, many manufacturing businesses often want to supplement their working capital, especially short-term capital. Furthermore, there aren't many businesses that qualify for issuance, the issuance costs are very high, and the interest rate must be attractive.

"Going public is even more difficult; you have to meet the issuance standards from the regulatory agency, and you also need to have a good reputation and a high credit rating to have any hope of attracting investors," Mr. Huan said.

Real estate corporate bonds have not yet recovered - Photo: QUANG DINH

2025 will be a brighter year.

According to Mr. Duong Thien Chi, an analyst at VPBank Securities (VPBanks), the real estate market in general and the corporate bond market in particular have not yet been fully revitalized despite numerous efforts from the Government.

According to data from VPBanks, the total value of maturing loans in 2025 will reach over 221,000 billion VND. Of this, real estate accounts for 48%, reaching nearly 107,000 billion VND. "The pressure of maturing loans in 2025 will be concentrated in the second half of the year and less intense in the first half."

However, we believe that in the first half of 2025, the market will continue to face many challenges and opportunities, depending on a range of macroeconomic factors, policy direction, and the capital needs of businesses," Mr. Chi commented.

Mr. Nguyen Huu Huan predicted that in 2025, banks will still be the "dominant" group in the corporate bond market with high issuance volumes. However, the expert is concerned that this trend does not accurately reflect the role of the corporate bond market.

Typically, businesses borrow directly through corporate bonds or indirectly from financial institutions, including credit institutions.

"Currently, banks are borrowing large amounts on the bond market, then lending them to businesses to profit from the interest rate differential," Mr. Huan worried, questioning whether the bond market is becoming "distorted."

"The bond market, which was expected to ease the burden on banks, has now become a channel where banks borrow and then lend to businesses. Ideally, a vibrant playing field should be created where businesses and 'creditors' can meet directly, not through intermediaries, to ensure access to capital at attractive interest rates, thereby promoting lower capital costs and increased profit margins," Mr. Huan analyzed.

The expert emphasized the need for solutions to enable businesses to directly participate in the capital market, mobilize capital at reasonable interest rates, promote production and business, and ensure that the corporate bond market's goal of reducing the burden of credit capital is achieved.

At the same time, further promoting the secondary trading market and increasing liquidity for bonds is necessary, Mr. Huan proposed. "The exchange already exists, but it's not yet truly vibrant or accessible to investors," Mr. Huan said, adding that the legal framework for corporate bonds needs to be strict but not "stifling."

Mr. Huan also predicted that real estate bonds will improve more positively in 2025 in line with the recovery cycle of the real estate market.

"A strong surge is unlikely; real estate bonds will continue to recover slowly, but more steadily. The biggest challenge for real estate bonds is regaining investor confidence after the recent crashes and crises," Mr. Huan said.

While a long-time expert in the corporate bond market argues that the current problem doesn't lie in the capital market itself, as the infrastructure, products, and investor base are already largely established, "The main issue now is the quality and business capacity of the issuing organizations," he said.

In general, if issuers fail to improve their governance capacity, professionalism, transparency, credibility, quality, and actual efficiency, they will not meet the standards to participate in the market, and even if they do participate, investors will not be very interested.

Businesses that operate transparently, professionally, and efficiently can easily issue bonds or raise capital through various channels, and may even face competition from investors seeking loans or investments.

Ms. Tran Thi Khanh Hien - Director of Research at MB Securities (MBS) - said that banks were the group with the highest issuance value and a strong increase compared to 2023, with an average weighted interest rate of 5.6%/year and an average term of 5.1 years.

According to MBS's compiled data, some of the banks with the largest market capitalization from the beginning of the year to date include: ACB (VND 36,100 billion), HDBank (VND 30,900 billion), and Techcombank (VND 26,900 billion).

"We believe that banks will continue to push for bond issuance to raise capital to meet lending needs. From the beginning of the year to December 7th, credit increased by 12.5%, higher than the 9% increase in the same period last year," Ms. Hien said.

According to MBS experts, banks typically incur higher costs when raising funds through bonds, but this channel provides them with Tier 2 capital, meeting regulatory safety ratios.

"Since the end of last year, banks have had to reduce the maximum ratio of short-term capital used for medium and long-term lending to 30%, instead of 34% as before," Ms. Hien said.

Source: https://tuoitre.vn/trai-phieu-doanh-nghiep-hoi-phuc-voi-443-000-ti-ngan-hang-nao-phat-hanh-nhieu-nhat-20250104231002156.htm