The corporate bond market will be more vibrant in the second half of the year

According to forecasts, the second half of 2024 corporate bond issuance by businesses will accelerate. Photo: ST

Circulation grew strongly

Regarding the situation of buying back bonds before maturity, according to the Vietnam Bond Market Association (VBMA) compiled from the Hanoi Stock Exchange (HNX) and the State Securities Commission (SSC), in June, businesses bought back 13,336 billion VND of bonds before maturity, down 68% compared to the same period in 2023. Data from the Ministry of Finance shows that in the first half of the year, the volume of pre-mature repurchases was 59.8 trillion VND, a decrease 39% over the same period in 2023.

According to data from the Ministry of Finance, from the beginning of the year to June 21, 2024, 41 enterprises have issued individual corporate bonds with a volume of 110.2 trillion VND. This number represents a remarkable growth in corporate bond issuance, increasing by 2.6 times compared to the same period in 2023.

In terms of structure, bonds of credit institutions still account for a significant proportion of 63.2% (equivalent to 69.6 trillion VND), real estate enterprises account for 28.6% (equivalent to 31.5 trillion VND). The investor structure shows that institutional investors buy corporate bonds on the primary market, accounting for 94.8% of the issuance volume, focusing on credit institutions (53.5%) and securities companies ( 21.9%), meanwhile, individual investors bought 5.2%. According to Fiin Ratings Joint Stock Company, taking advantage of low interest rates, credit institutions increase the issuance of medium and long-term bonds to ensure the safety ratios of the State Bank as well as to prepare capital sources when credit growth is more capable of recovery in the second half of the year.

In the second half of 2024, Fiin Ratings estimates that there will be about 139,765 billion VND of bonds maturing, of which the majority are real estate bonds with 58,782 billion VND, equivalent to 42%. Bond maturity pressure continues to be high in the third and fourth quarters of 2024, with the real estate industry accounting for 64% of total mature corporate bonds, in the context of many businesses having to request to defer debt payments and adjust acquisition plans. “Payment pressure exists for the real estate industry in the third quarter of 2024 when it reaches a value of 37 trillion VND, accounting for 64% of total corporate bonds due. In recent times, a large number of businesses have requested to defer principal payments and amend acquisition plans, which has relieved immediate payment pressure," said experts from Fiin Ratings.

Along with that, from the beginning of the year until now, the market has recorded an additional 20 trillion VND of delayed corporate bonds, including 72% of the value of bonds whose maturity was postponed from 1-2 years. The above plan helps businesses continue to have more time to focus on handling production and business difficulties and balancing cash flow to repay debt, especially for the real estate group when debt repayment ability is still low in the context of slow recovery of the housing market.

It will accelerate in the second half of the year

Facing the recovery of the macro economy, Fiin Ratings experts predict that businesses' demand for borrowing and issuing corporate bonds will accelerate in the second half of 2024, helping credit growth reach the target of 14-15% in whole year. According to analysis, Vietnam's exports grew again thanks to economic recovery in main markets, leading to improved capital needs of manufacturing enterprises. In addition, credit growth for the real estate business sector, including real estate corporate bond investment by commercial banks, recovered as legal obstacles were gradually resolved.

In addition, newly passed laws are expected to create conditions for the recovery of the real estate market, thereby promoting the issuance of real estate corporate bonds. Along with that, to meet increased credit demand in the second half of the year, credit institutions will need to consolidate medium and long-term capital sources, including the form of bond issuance to increase capital level 2. Therefore Corporate bond issuance activities of credit institutions will be busier in the near future. According to Fiin Ratings, as the largest group of corporate bond investors, the fact that credit institutions boost output through corporate bond investment channels is an important factor to help the corporate bond market become more vibrant in the second half of this year.

To continue to stabilize and develop the corporate bond market, the Ministry of Finance said it has reported to the Government leadership on overall operating solutions. The main solution groups include: synchronously implementing macro policy management solutions, controlling inflation, promoting disbursement of public investment capital; remove difficulties and stabilize the real estate market; Monitor due corporate bond payments and strengthen information and propaganda work; organize the market and improve the efficiency of management and supervision; Overall review to complete legal regulations related to corporate bond issuance in the Securities Law, Enterprise Law and related laws; Research policies to encourage credit ratings, promote the stock market upgrade roadmap, develop the institutional investor system, etc.

In the coming time, the Ministry of Finance will continue to monitor the situation of the corporate bond market, especially the coordinated implementation of macroeconomic management policies and real estate market recovery. Along with managing the appropriate credit growth rate, measures to ensure transparency and improve quality in the corporate bond market will support the market to develop more safely, healthily, and sustainably.