More than VND25.8 trillion ($1.07 billion) of private placement corporate bonds will mature in September, marking one of the highest months for maturity value in 2023, according to leading Vietnamese broker VNDirect.
In a new report, VNDirect said that private placements of corporate bonds and negotiations between issuers and bondholders on bond term extension were bustling in August. Meanwhile, pre-mature bond redemption activities slowed down compared to previous months, with a total value of only VND7.25 trillion ($300.6 million).
There were 13 successful bond issuances in August, with a total value of about VND12.77 trillion ($529.4 million), 58.5% lower than July. In the first eight months of 2023, the figure reached nearly VND101 trillion ($4.9 billion), down 54.75% year-on-year.
The broker said that negotiations to change bond terms and conditions between issuers and bondholders continued to be vibrant in the past month. From August 1-24, 44 issuers reached agreements with bondholders to extend payment deadlines for bonds totalling more than VND58.8 trillion ($2.44 billion).
However, VNDirect noted that the pressure on private placement corporate bonds maturing in September will remain high, while businesses with delayed payments as announced by the Hanoi Stock Exchange (HNX) continue to increase.
In the month to August 24, 67 enterprises reported late payments of bond coupons or principals, with combined outstanding bond debt reaching VND173.68 trillion ($7.2 billion), accounting for about 15.9% of the market, according to the HNX. Most issuers are real estate developers.
In a report released earlier this year, VNDirect estimated the maturity value of private placement corporate bonds this year at nearly VND252 trillion ($10.63 billion), a year-on-year increase of 64%.
This includes VND160 trillion ($6.75 billion) in the second and third quarters. Real estate businesses account for the largest proportion with 43% of the total maturity value, or VND107.7 trillion ($4.54 billion).
The corporate bond market experienced overheated growth in 2020 and 2021 with an issuance value of nearly VND462 trillion ($19.66 billion) and VND658 trillion ($28 billion), respectively, according to the Vietnam Bond Market Association.
However, the market slowed after the mid-2022 arrests of several real estate business leaders for bond issuance violations and improper use of mobilized capital.
To revive the bond market, the government has taken many measures, including the issuance of Decree 08. The decree, 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.
Most recently, a trading platform for private placement corporate bonds (PPBs) was launched in Hanoi on July 19, marking an important milestone for Vietnam’s bond market. It is expected to help increase market liquidity and transparency, as well as provide regulators, market players, and investors with more information for appropriate market management and development policies as well as investment decisions.
Vietnam's private placement corporate bond market recorded total trading volume of 23,328,110 bonds over one month from its debut, equivalent to nearly VND5.77 trillion ($242 million). On average, trading volume reached 1 million bonds per session, while trading value reached VND250.6 billion ($10.52 million).