$9.4 bln in corporate bonds to mature by year-end

The value of corporate bonds maturing in the remaining nine months of 2023 is estimated at VND220.77 trillion ($9.4 billion), including VND93.2 trillion ($3.97 billion) issued by real estate firms, according to FiinRatings, a leading domestic credit rating agency.

Of the total, VND36.2 trillion ($1.54 billion) of bonds is set to mature in the second quarter of this year and VND35.4 trillion ($1.51 billion) in Q3, it said in a recent report.

FiinRatings stated that the Vietnamese corporate bond market in March recorded 13 bond issuances with a total value of VND27 trillion ($1.15 billion), six of which worth VND23.7 trillion ($1.01 billion) were made by five property developers.

The March private bond placement value increased three times from the previous month and over two times compared to the same period last year.

"Although the month-on-month increase reflects a rebound in bond issuances, we can't be sure the market will liven up again in the second quarter and need to keep a close watch on regulators’ moves to remove market difficulties and restore investor confidence," the report said.

The value of redeemed corporate bonds in March reached nearly VND18 trillion ($766 million), three times higher than the previous month and a two-fold increase over the same period in 2022.

It marked the first month the market had seen the redemption value lower than issuances since the government's Decree 65 on private placement of corporate bonds was issued in September 16, 2022. This was a good initial sign for the issuers’ liquidity, FiinRatings noted.

FiinRatings analysts believe that the State Bank of Vietnam’s recent policy interest rate reductions, Decree 08 which amends Decree 65, and Resolution No. 33 on removing difficulties for and promoting the real estate market, and most recently, the establishment of a working group to solve problems facing Novaland and DIC Corp. have had positive impacts on the real estate market.

"This is also a premise for the corporate bond market to gradually recover because the legal factor is the biggest risk in the credit market,” they said.

Decree 08, effective from March 5, 2023, allows issuers to extend their bond maturities by up to two years and pay principal and interest with assets other than cash.

The new decree also suspends a regulation in Decree 65 defining individuals' statuses as "professional securities investors". According to the old rule, in order to buy private placement corporate bonds, individual investors needed to hold a securities portfolio, excluding margin loan value, worth at least VND2 billion ($84,300) for 180 days.

As of April 17, 89 issuers had failed to meet their bond payment obligations, totaling VND113.14 trillion ($4.82 billion), an increase of 19.8% from one month ago.