The corporate bond market will enter new period of development

VCN – After recovering in 2023, the corporate bond market is predicted to see slow growth trend in 2024 due to the impact of stricter provisions of Decree 65 /2022/ND-CP. However, this will help investors enjoy benefits because it creates transparency, as well as the quality of issued corporate bonds.
Labour market set for recovery in 2024 Labour market set for recovery in 2024
Binh Duong export growth hopes to bounce back Binh Duong export growth hopes to bounce back
The corporate bond market will enter new period of development
The corporate bond market continues to be an effective medium and long-term capital mobilization channel for businesses. Photo: Internet

Applying high requirements to restore market confidence

According to data from the Vietnam Bond Market Association, in 2023, total value of issued corporate bond is worth at VND 311,240 billion, including 29 issuances of the publically offered bond valued at VND 37,071 billion, and 289 issuances of the privately placed bond. Banking is the industry group that has issued the largest volume of bond worth VND 176,006 billion, followed by the real estate group at VND 73,202 billion. In December, enterprises have bought back bonds worth VND 32,677 billion, decreasing by 50.4% year-on-year.

Fiin Group data shows that the privately placed bond market saw a slight recovery in 2023 with the worth of VND 345.8 trillion. The value of the publically offered bond reached VND 37 trillion. The issuance of industry groups showed signs of recovery after a period of gloomy issuance.

We expect that the market will remain its slow growth trend in 2024 due to the impact of provisions on professional securities investor and mandatory credit ratings of Decree 65/2022/ND- CP, which have come into effect. However, investors will benefit from these conditions because of transparency, as well as the quality of newly issued corporate bonds is expected to improve, Fin Group assessed.

According to Fiin Group, the volume of privately placed bond decreased by 14.13% in 2022 to 9.8%/ GDP in the end of the year due to the slow insurance of new bonds while the strong development of buyback activities. The structure of corporate bonds by industry is still implemented by credit institutions with VND353.2 trillion (39% of outstanding bond value) and real estate with VND294 trillion VND (accounting for 33% of outstanding bond value).

Fiin Group expects that the corporate bond market in 2024 will enter a new period of development in a stricter direction with the application of closer requirements for all market participants, thereby helping the issuance of new bonds recover. The effect of regulations in Decree 65/2022/ND-CP in 2024 will provide stricter discipline for all stakeholders and support the restoration of market confidence. The need for large issuance by banking groups to supplement capital and meet financial safety targets will lead the bond market in 2024.

VNDIRECT Securities experts also said that the corporate bond market may gradually recover after the removing of difficulties for the market through the gradual recovery of corporate bond issuance and the intense negotiations on extension of bond terms after the effect of Decree 08/ND-CP.

In 2023, the total value of matured privately placed bonds increased by about 100% year-on-year to VND 216 trillion, including about 40% of real estate group. Amid the difficult business operations and tight cash flow, many issuers have implemented negotiation plans to extend bond terms with bondholders. According to VNDIRECT's summary, as of December 29, 2023, the total value of extended privately placed bonds reached about VND116 trillion.

The corporate bond market in 2024 will gradually restore investor’s confidence

Experts also say that the pressure on corporate bonds due in 2024 is still significant. The total value of privately placed bonds due in 2024 is about VND 207 trillion, down 3% year-on-year, including 59.3% of real estate enterprises. Besides, there are still many issuers facing difficulty paying due bond debt.

According to VNDIRECT, about 71 issuers are late in paying due bond debt, the total outstanding corporate bond debt of these issuers is about more than VND172.5 trillion, accounting for about 16.9% of the outstanding bond debt in the entire market, and most of the issuers are real estate operators. In addition, the issuance may become quiet again, when the provisions in Decree 08/ND-CP including regulations on professional securities investors and mandatory credit rating regulations will officially take effect from the beginning of 2024.

Minister of Finance Ho Duc Phoc sai that the volume of matured bonds in 2024 is worth about 301 trillion VND. However, the macroeconomy and financial and monetary markets are currently much more stable compared to the end of 2022 and the first months of 2023. These are favorable conditions for issuers to stabilize production and business activities and fulfill principal and interest payment obligations to investors. Each industry and field has its own operating characteristics, so it will have different levels of recovery and development.

Recently, the Government has directed ministries and sectors to drastically implement solutions, so since the second quarter, the corporate bond market has shown signs of improvement and investor psychology has gradually restored. In addition, some organizations proactively buy back bonds to restructure capital sources, bond restructuring negotiations continue to be implemented, helping the issuers have more time to recover production and business and create cash flow to repay debt, relieve liquidity pressure.

Through assessment, the implementation of Decree 08/2023/ND-CP is relatively effective. By the end of 2023, 57.3% of the volume of bonds with delayed repayments had been negotiated, of which 6.8% had been paid part of the principal and interest to investors, and 50.4% had been negotiated to restructure bond debt.

The recovery of macro-economy, the good financial potential of investors, the stable production and business activities, and ability of debt payment until the new issuance period, thereby rebuilding confidence for investors and strengthening psychology for the corporate bond market and the capital market.

The current interest rate level is also at a relatively low level, businesses with good projects and feasible business plans can access credit capital sources to serve production and business, creating cash flow for implementation. debt obligations, including corporate bond debt obligations.

Motivated by the comprehensive implementation of solutions on the legal framework and strengthening of inspection and supervision, and the improved macroeconomy, Minister Ho Duc Phoc said that the corporate bond market in 2024 will gradually restore investment confidence, and to be an effective medium and long-term capital mobilization channel for businesses.

By Hoai Anh/Ngoc Loan

Related News

Available foundations and drivers for strong economic growth

Available foundations and drivers for strong economic growth

VCN - Discussing the potential for Vietnam's economic growth in the coming time, Associate Professor, Dr. Tran Hoang Ngan, National Assembly delegate from Ho Chi Minh City said that Vietnam's economy has many driving forces for strong growth from exports, foreign investment and domestic consumption. At the same time, strong financial resources are also an important foundation for development.
Accelerating green transformation for businesses

Accelerating green transformation for businesses

VCN - The green transformation of enterprises is facing many barriers due to the lack of specific regulations and detailed instructions, leading to delays compared to the international market.
Infrastructure obstacles hold back development of enterprises

Infrastructure obstacles hold back development of enterprises

VCN - Building and completing infrastructure is a vital factor to support enterprises development. However, this is always a problem that causes many difficulties for them and it is a concern for management agencies.
Accurately determining current state of public assets nationwide

Accurately determining current state of public assets nationwide

VCN - At the Conference on guiding the general inventory of public assets organized by the Ministry of Finance on August 20, Deputy Minister of Finance Bui Van Khang emphasized that public asset inventory is an important task but also very difficult and complicated, therefore, relevant agencies need to make efforts to get the most accurate results.

Latest News

Monetary policy forecast unlikely to loosen further

Monetary policy forecast unlikely to loosen further

It will be difficult for the State Bank of Vietnam (SBV) to further loosen monetary policy due to a rising USD/VNĐ exchange rate pressure, experts said.
World Bank outlines path for Vietnam to reach high income status

World Bank outlines path for Vietnam to reach high income status

The World Bank (WB) has released a report which explores how Vietnam can upgrade its participation in global value chains to become a high-income country by 2045.
Strictly control public debt and ensure national financial security  2025

Strictly control public debt and ensure national financial security 2025

VCN – In order to achieve goal of strictly managing public debt and maintaining security and safety of the national financial system in 2025, it is necessary to ensure the borrowings and repayments of public debts is within the approved estimate; closely monitor public debt indicators to ensure that they are within the ceiling and warning thresholds approved by the National Assembly.
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

VCN - On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws. Concluding the session, Vice Chairman of the National Assembly Nguyen Duc Hai emphasized the need for the Government to direct the drafting body and relevant agencies to collaborate closely to finalize a persuasive and widely supported report, ensuring the quality of the draft law for the National Assembly's consideration and decision.

More News

Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

VCN - According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
State-owned securities company trails competitors

State-owned securities company trails competitors

Contrary to the outstanding performances in the banking sector, the securities subsidiaries of major banks have yet to fully leverage their potential, despite numerous inherent advantages.
Strengthening the financial “health” of state-owned enterprises

Strengthening the financial “health” of state-owned enterprises

VCN - The state economy plays a key role in the socio-economic development process, but it is necessary to strengthen the financial health and competitiveness of state-owned enterprises (SOEs).
U.S. Treasury continues to affirm Vietnam does not manipulate currency

U.S. Treasury continues to affirm Vietnam does not manipulate currency

VCN - In its latest report, the U.S. Department of the Treasury has positively assessed Vietnam's monetary policy, reaffirming that Vietnam does not engage in currency manipulation.
Exchange rate fluctuations bring huge profits to many banks

Exchange rate fluctuations bring huge profits to many banks

Net profits from the foreign exchange trading segment of many banks have gained positive results thanks to a strong USD/VNĐ exchange rate fluctuations this year.
A “picture” of bank profits in the first nine months of 2024

A “picture” of bank profits in the first nine months of 2024

VCN - Pre-tax profits for banks during the first nine months of 2024 remained positive, exceeding 200 trillion VND, solidifying the sector's position as a market leader.
Many challenges in restructuring public finance

Many challenges in restructuring public finance

VCN - Restructuring public finance is an important step to improve state financial management, ensure resources are allocated reasonably and effectively, contributing to the country's sustainable development. In addition to the achieved results, the process of accelerating public finance restructuring also faces many pressures.
Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

VCN - E-commerce platforms that declare and pay taxes on behalf of traders not only help to reduce the number of tax declaration points but also reduce the cost of compliance with administrative procedures for the whole society because only one point as the e-commerce trading platform implements tax deduction, payment and declaration on behalf of tens, hundreds of thousands of individuals and business households on the platform.
Disbursement of public investment must be accelerated: Deputy PM

Disbursement of public investment must be accelerated: Deputy PM

Deputy Prime Minister Ho Duc Phoc has called on ministries, agencies, and localities to accelerate the disbursement of public investment from now until the year-end and further tighten investment management.
Read More

Your care

Latest Most read
Monetary policy forecast unlikely to loosen further

Monetary policy forecast unlikely to loosen further

It will be difficult for the State Bank of Vietnam (SBV) to further loosen monetary policy due to a rising USD/VNĐ exchange rate pressure, experts said.
World Bank outlines path for Vietnam to reach high income status

World Bank outlines path for Vietnam to reach high income status

The World Bank (WB) has released a report which explores how Vietnam can upgrade its participation in global value chains to become a high-income country by 2045.
Strictly control public debt and ensure national financial security  2025

Strictly control public debt and ensure national financial security 2025

VCN - According to the plan for borrowing and repaying public debt and foreign debt of the country in 2025, the total borrowing demand of the Government in the year is expected to be at VND 815,238 billion, an increase of 20.6% compared to the Government'
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws.
Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
Mobile Version