Corporate bond issuance rises in eight months

A total of 117 trillion VND worth of corporate bond notes were raised in the first eight months of 2019 according to SSI Securities Corporation research unit
corporate bond issuance rises in eight months

Cash notes being counted in exchange for bond notes. (Photo: vietnambiz.vn)

The figure means the successful issuance rate in the first eight months was 90.8 percent and the value of the corporate bond market was equal to 10.2 percent of Vietnam’s total gross domestic product (GDP), SSI Retail Research estimated.

The total value of corporate bond offered in the first eight months was estimated at 129 trillion VND, the SSI unit estimated upon information disclosed on the stock exchanges and companies’ websites.

According to the Ministry of Finance, a total of 224 trillion VND worth of corporate bond notes was raised in 2018, up 94.5 percent year on year. The value of the market last year was 474.5 trillion VND, equalling 8.6 percent of the total GDP and higher than the 6.19 percent in 2017.

Commercial banks were still the biggest issuers, raising total 56 trillion VND – 47.9 percent of the total. Banks were followed by property developers, which raised nearly 37 trillion VND – 31.5 percent of the total, infrastructure constructors (9.2 trillion VND, 7.9 percent), and non-banking financial firms (4.42 trillion VND, 3.8 percent).

Though realty firms ranked second in the list of top issuers, the successful issuance rate of the sector was 77.3 percent – the lowest among those mentioned. Forty-four property firms opened 139 placements to offer 47.8 trillion VND worth of bond notes.

Banks’ bond yield rates were the lowest, fixed and annually-paid. Average per-annum bank bond yield rate was 6.75 percent and average maturity was 3.3 years.

On the contrary, realty bond yield rates were the highest at a per-annum average of 10 percent, which was followed by infrastructure (9.79 percent) and financials (8.64 percent).

According to SSI Retail Research, Decree 163/2018/NĐ-CP dated December 4, 2018 opened the corporate bond market for the business community by reducing the ratio of short-term capital spent on medium- and long-term lending.

The increase of the risk ratio in bank loans for real estate projects motivated companies to raise capital via bond issuance from making bank loans.

In addition, the transparency of information disclosure and more active participation of middle stakeholders like banks and brokerages made corporate bonds more attractive.

However, there are still risks with the local corporate bond market despite good growth in recent years, according to Nguyen Viet Cuong, vice director of analysis centre at Vietinbank Securities Co.

“The biggest risk now is information transparency. In other markets, the role of credit rating firms is quite clear and important because they have various rankings for various types of corporate bond and investor appetite,” he said.

“Therefore, Vietnam will soon have to make space for business credit rating institutions to make the corporate bond market more transparent” and make it a good source of capital for companies beside bank loans, Cuong said.

Though the Vietnamese corporate bond market has made big improvements, it should be noted that commercial banks are still the biggest bond buyers, especially in the real estate sector, while the identity of buyers should be public, Nguyen Duc Hung Linh, director of inpidual customer analysis and consultancy at SSI Securities Corp, said.

If the role of credit rating firms remained vague, bond buyers, especially inpiduals, would not be able to find the appropriate yield rates, he said, adding investor protection policies must be improved in the future.

According to economic specialist Bui Quang Tin, CEO of Bizlight Business School, bondholders may face higher risks when they purchase corporate bonds because they have no collateral from the companies.

"The higher the yield rates are, the higher the risks," he said, adding "the major risk lies in true information of firms, which cannot be found publicly and is sometimes hidden from inpidual investors".

Purchasing corporate bonds may sometimes mean all-in for investors, according to Tin. If the company declares bankruptcy, investors may lose everything so there must be a policy to protect bond buyers from such risk.

Source: VNA

Related News

Further improvement needed in work permit issuance

Further improvement needed in work permit issuance

VCN - Further improving procedures for granting work permits and business licenses to enterprises will make Vietnam more attractive to foreign investors.
Corporate bond issuance doubles in seven months

Corporate bond issuance doubles in seven months

VCN – Reporting on the situation of the corporate bond market, the Ministry of Finance said that in July 2024, there were 56 successful individual corporate bond issuances with a volume of about VND45 trillion, decreasing by 15% compared to June 2024 and increasing by 57% compared to the same period in 2023.
Corporate bond issuance soars in comparison to 2023

Corporate bond issuance soars in comparison to 2023

VCN - According to the Ministry of Finance, from the beginning of the year to June 21, 2024, 41 enterprises have issued private corporate bonds with a total value of VND 110.2 trillion.
Improving legal framework, ensuring accessibility to green bonds

Improving legal framework, ensuring accessibility to green bonds

VCN - This is the recommendation of Mr. Nguyen Tung Anh (photo), Head of Credit Risk Research and Sustainable Financial Services (FiinRatings) in an interview with Customs Magazine reporters about green bond market development in Viet Nam.

Latest News

Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
Striving for average CPI not to exceed 4%

Striving for average CPI not to exceed 4%

VCN - According to the report of the Ministry of Finance, there are still some factors that put pressure on price levels in the remaining months of 2024, so the Ministry has updated 2 scenarios of average inflation in 2024 increasing in the range of 3.7-3.92%.
Delegating the power to the government to waive, lower, or manage late tax penalties is suitable

Delegating the power to the government to waive, lower, or manage late tax penalties is suitable

VCN - Discussing in groups about the project "1 law amending 7 laws" in the financial sector according to the program of the 8th Session on October 29, 2024, National Assembly delegates proposed that the Government should be assigned to make specific regulations on decentralization, granting the right to exempt and reduce taxes, and handling penalties for late payment of taxes...
Removing difficulties in public investment disbursement

Removing difficulties in public investment disbursement

VCN - According to the report of the Investment Department (Ministry of Finance), the estimated disbursement from the beginning of the year to October 31, 2024 is VND 355,616.1 billion, reaching 47.43% of the 2024 plan, reaching 52.29% of the plan assigned by the Prime Minister.

More News

State-owned commercial banking sector performs optimistic growth, but more capital in need

State-owned commercial banking sector performs optimistic growth, but more capital in need

VCN - According to the report sent to the National Assembly before the 8th Session of the Government on investment, management and use of state capital in enterprises nationwide in 2023, the business performance of the state-owned commercial banking sector achieved positive growth.
Stipulate implementation of centralized bilateral payments of the State Treasury at banks

Stipulate implementation of centralized bilateral payments of the State Treasury at banks

VCN - The Ministry of Finance (MOF) gathers feedback on the draft Circular regulating the management and use of accounts of the State Treasury opened at the State Bank of Vietnam (SBV) and commercial banks.
Rush to finalize draft decree on public asset restructuring

Rush to finalize draft decree on public asset restructuring

VCN - According to the Ministry of Finance, the draft Decree regulating the rearrangement and handling of public assets is being urgently completed by the Ministry of Finance to submit to the Government for promulgation.
Inspection report on gold trading activities being complied: SBV

Inspection report on gold trading activities being complied: SBV

The State Bank of Vietnam (SBV) has announced that inspections on compliance with legal policies in gold trading activities of credit institutions and gold trading businesses have been completed and an inspection report is being compiled.
Budget revenue in 2024 is estimated to exceed the estimate by 10.1%

Budget revenue in 2024 is estimated to exceed the estimate by 10.1%

VCN -The Government estimates that state budget revenue in 2024 will exceed VND 172.3 trillion, up 10.1% over the estimate, of which tax and fee revenue will reach 13.1% of GDP.
Ensure timely and effective management and use of public asset

Ensure timely and effective management and use of public asset

VCN – In order to promptly and effectively implement public asset management and use, ensuring compliance with legal regulations, the Ministry of Finance has just issued an official dispatch requesting ministries, branches and localities to comply with regulations in the Government’s Decree No. 114/2024/ND-CP dated September 15, 2024.
Accelerating decentralization in public asset management

Accelerating decentralization in public asset management

VCN - Amending the Law on Management and Use of Public Assets aims to improve regulations on accelerating decentralization and improving efficiency in management and use of public assets, and promoting financial resources, ensuring that the unified application the Law on Management and Use of Public Assets and other legal documents.
Difficulty in finding banks eligible to receive compulsory transfers

Difficulty in finding banks eligible to receive compulsory transfers

VCN - Reporting to the National Assembly, the State Bank of Vietnam (SBV) said that one of the difficulties in restructuring the credit institution system is the long process of finding and negotiating banks eligible to receive compulsory transfers.
Businesses can choose a suitable electronic invoice model generated from the cash register

Businesses can choose a suitable electronic invoice model generated from the cash register

VCN - The Ministry of Finance said that individual business households can choose a suitable model to apply electronic invoice solutions from cash registers, depending on the number of invoices used in the year, in the month and the current status of software solutions and technical infrastructure.
Read More

Your care

Latest Most read
Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
Striving for average CPI not to exceed 4%

Striving for average CPI not to exceed 4%

VCN - According to the report of the Ministry of Finance, there are still some factors that put pressure on price levels in the remaining months of 2024, so the Ministry has updated 2 scenarios of average inflation in 2024 increasing in the range of 3.7-3
Delegating the power to the government to waive, lower, or manage late tax penalties is suitable

Delegating the power to the government to waive, lower, or manage late tax penalties is suitable

National Assembly delegates proposed that the Government should be assigned to make specific regulations on decentralization, granting the right to exempt and reduce taxes, and handling penalties for late payment of taxes...
Removing difficulties in public investment disbursement

Removing difficulties in public investment disbursement

VCN - According to the report of the Investment Department (Ministry of Finance), the estimated disbursement from the beginning of the year to October 31, 2024 is VND 355,616.1 billion, reaching 47.43% of the 2024 plan, reaching 52.29% of the plan assigne
State-owned commercial banking sector performs optimistic growth, but more capital in need

State-owned commercial banking sector performs optimistic growth, but more capital in need

According to the report of the Government on investment, management and use of state capital in enterprises nationwide in 2023, the business performance of the state-owned commercial banking sector achieved positive growth.
Mobile Version