Bonds of some industry groups disappear from the market

Bank bonds still account for the "overwhelming" proportion, some industry groups have disappeared from the market (illustrative photo). Photo: Luc Giang

Many industry groups disappear from the corporate bond market

According to records on the corporate bond market, the first half of July was still quite gloomy, the market had 14 bond issuances with a total issuance value of VND 11,332 billion.

Of which, only VND412 billion worth of bonds were issued by a real estate company (Hung Thinh Phat General Development Joint Stock Company), VND20 billion worth of bonds came from the Securities sector (Petroleum Securities Joint Stock Company). The remaining VND10,900 billion worth of bonds were issued from the banking sector, accounting for 96% of the total issuance value.

Regarding issuance interest rates, real estate corporate bonds remain at the highest level at 12%/year, followed by oil and gas securities at 8.9%/year. In the banking group, the bond with the highest interest rate belongs to HDBank at 7.47%/year, other banks have average interest rates at 5-7%/year.

Notably, since the beginning of July, bonds from some industry groups have almost disappeared from the market. According to issuing organizations, bonds from production, business and service enterprises have almost disappeared. Only 432 billion VND came from a real estate business and a securities company, the rest are all bank bonds.

Since the beginning of the year, bank bonds have always dominated the market. Data from the Vietnam Corporate Bond Market Association (VBMA) shows that in the first 6 months of the year, bank bonds accounted for 57.4% of the total issuance value, real estate bonds accounted for only nearly 31% of the issuance value, the rest were bonds from other sectors.

The moves by banks to boost bond issuance in the context of low interest rates as present help credit institutions consolidate capital safety ratios, expand medium and long-term capital scale to meet capital demand for credit growth in the second half of the year, towards the credit growth target set by the State Bank.

Need to regain investor confidence for market recovery

Along with promoting new issuance, banks have also actively bought back bonds before maturity, with VND38,366 billion worth of bonds bought back in the first half of the year. Buying back bonds before maturity gives banks more room to issue new bonds with maturities of over 5 years to supplement the necessary capital to meet capital safety regulations.

For other industry groups, recently, a large number of businesses have made moves to negotiate with bondholders to extend or postpone principal payments and amend buyback plans, relieving immediate payment pressure.

This plan continues to help businesses have more time to focus on handling production and business difficulties and balancing cash flow to repay debts, especially for the real estate group when debt repayment capacity is still low in the context of a slow recovery of the housing market.

Assessing the corporate bond market in general recently, Dr. Nguyen Tri Hieu - an economic expert, commented that the bonds issued since the beginning of the year are mostly bonds of banks with high liquidity. Other corporate bonds, especially real estate enterprises, are still in a state of stagnation.

For the market to recover and develop stably, according to Dr. Nguyen Tri Hieu, the most important thing is to regain market confidence and investor confidence. In particular, the solution proposed by the expert is that all corporate bonds must be credit rated, so that investors have a basis to evaluate and assess the debt repayment capacity of the issuers, not just credit rating for large bond issuances as prescribed by Decree 65.
"If we can do this, we can regain investor confidence and attract investors back to the bond market," said Dr. Nguyen Tri Hieu.

Source: https://laodong.vn/kinh-doanh/trai-phieu-mot-so-nhom-nganh-bien-mat-tren-thi-truong-1368940.ldo