Many positive signals in the corporate bond market

Investment in the corporate bond channel is expected to increase, contributing to mobilizing social resources to serve economic development. Photo: Internet

New issuances double compared to 2023

According to Tran Phu Viet, Head of Product Research and Development at FiinGroup's Financial Data Department, the primary corporate bond market has seen a significant turnaround in 2024 compared to the sluggish performance in 2023, which was marked by delayed payments and interest rate fluctuations.

FiinGroup's data reveals that as of August 13, 2024, the total value of corporate bond issuance reached VND 240,000 billion, representing a substantial 102% increase year-on-year. Consequently, the outstanding bond balance has climbed to VND 1,210,000 billion, equivalent to approximately 11.7% of Vietnam's 2023 GDP.

The breakdown of bond issuance shows that bank bonds accounted for the largest portion at VND 136,500 billion, representing 68% of the total. A significant portion of these bonds was issued to institutional investors and the public, while others were used to increase the capital of banks due to the specific characteristics of the banking industry. Real estate bonds accounted for VND 43,200 billion, or 21.54% of the total issuance value in 2024.

Moreover, the average nominal interest rate stood at 7.47% in the first eight months of 2024, down from 8.13% in 2023. "The resurgence of corporate bond issuance is a positive sign for the primary market, and the decline in nominal interest rates compared to the 2023 average indicates a gradual reduction in market risks," said Tran Phu Viet.

FiinGroup's data also shows that the outstanding balance (principal and interest) of bonds maturing in 2024 is VND 315,000 billion, while the peak for 2025 is estimated at VND 334,000 billion. Specifically, real estate bonds have an outstanding balance of VND 60,000 billion maturing in 2024, and the estimated figure for 2025 is VND 135,000 billion. Additionally, the rate of delayed payments has decreased significantly compared to the peak in 2023, particularly for real estate bonds, as investors and issuers have proactively restructured their bond debts. "There are two main reasons for this: companies have improved their financial conditions, and businesses and issuers have restructured their debts before the maturity date. As a result, the rate of delayed payments, according to some statistics, has decreased significantly compared to 2023," said Tran Phu Viet.

Enterprises outside key industries participating in bond issuance

FiinGroup experts reported that the secondary corporate bond market on the Hanoi Stock Exchange (HNX) has been operational for a year, with nearly 1,000 bonds registered for trading. Since the beginning of 2024, the average daily trading volume has been approximately VND 4,300 billion, with 86.68% coming from individual bond transactions. Buyback transactions have remained active, partly due to the restructuring of terms and interest rates by issuers, and partly to reduce bond debt pressure or restructure bond debts of enterprises. Experts expect the market to see improved liquidity due to increased transparency and the growing demand for term businesses in Vietnam.

Nguyen Quang Thuan, Chairman of FiinGroup, stated that after a period of stagnation and numerous difficulties, the corporate bond market has made a soft landing for old bonds, especially real estate and renewable energy bonds, and is entering a new phase of development. Transparent and high-quality enterprises have issued bonds, and not only real estate and banking bonds, but also bonds from various non-core industries such as infrastructure, water, and waste have been issued. Notably, the participation of underwriters in the bond market has contributed to the market's development prospects, albeit slowly but steadily, and in a more in-depth manner.

"The government's target is to increase the size of the corporate bond market to 25% of GDP by 2030. This is an ambitious goal, and there is much to be done in terms of market policies, infrastructure, etc. One of the major initiatives being promoted by the Ministry of Finance and other agencies is the development of a base of institutional investors as they are the ones with fixed income in the corporate bond market. Individual investors should only participate through professional fund management companies because assessing bond risks is truly challenging for them, even for those in the finance industry. We expect to improve policies so that through professional organizations, people's money will be channeled into the bond channel more, helping to mobilize social resources to serve economic development," emphasized Nguyen Quang Thuan.