Bond maturity pressure peaks in Q4

Analysts predict peak bond maturity pressure in the fourth quarter of this year, with the real estate sector facing the most significant burden at over 43% by October 4.

Companies will need to issue more bonds to raise capital during this quarter.

As of October 4, data compiled by the Vietnam Bond Market Association (VBMA) from the Hanoi Stock Exchange (HNX) and the State Securities Commission of Vietnam (SSC) show that corporate bond issuances have totalled nearly 312.1 trillion VND (12.5 billion USD) in 2024.

This consists of 15 public offerings worth over 27 trillion VND (8.7% of total issuances) and 294 private placements worth 285 trillion VND (91.3%).

Pre-maturity bond repurchases have reached 144 trillion VND, down 21.1% year-on-year. The banking sector leads in repurchasing, accounting for about 72.5% of the total repurchased value, of approximately 104.4 trillion VND.

For the remaining part of 2024, nearly 78.9 trillion VND worth of bonds is set to mature, with approximately 43.5% of these bonds falling under the real estate sector, totalling over 34.3 trillion VND. The banking sector follows closely with nearly 8.5 trillion VND (10.8%).

Private placements of bonds have reached 750 trillion VND as of October 4.

An analyst from VNDirect Securities Corporation said that the pressure of corporate bond maturities in October remains substantial, with active negotiations underway to adjust bond terms.

In detail, over 22.3 trillion VND in private placements of corporate bonds will mature in October, indicating persistent pressure throughout the month and into the last two months of the year.

Nguyen Ba Khuong, head of the Investment Advisory Centre at VNDirect, said that the fourth quarter marks the peak in bond maturities for the year.

Private corporate bonds maturing in Q4 account for approximately 42% of the total maturing value for 2024.

The pressure from corporate bond maturities in 2025 is also significant, with nearly 180 trillion VND in corporate bonds set to mature, accounting for less than five% of the total value in 2024 and focusing primarily on Q3 and Q4, Khuong added.

According to Khuong, the pressure from corporate bond maturities is rising in Q4/2024, easing briefly in Q1 and Q2/2025 before increasing again in Q3 and Q4/2025. Over 40% of the total maturing value belongs to the real estate sector.

Negotiations for bond term adjustments were active last month. Over 100 issuers have extended bond payment deadlines by over 155 trillion VND by September 27, 2024.

A senior analyst at the Phu Hung Securities Corporation, Bui Thi Quynh Nga, said the optimism despite lower Q3 issuances compared to the past three years, was due to a recovering bond market and weak real estate sector.

The persistent pressure will lead many companies to issue bonds in Q4, while bond repurchasing activities are expected to remain strong. The interest rate base is likely to stay high, especially for real estate.

The real estate sector poses a risk if it fails to recover as expected, Nga said./.