More than VND27.9 trillion ($1.17 billion) of private placement corporate bonds will mature in August, about 31% higher than July, Vietnamese broker VNDirect estimated.
In July, there were 12 successful private corporate bond placements with a total value of VND4.32 trillion ($181.8 million), down 84.7% from the previous month, according to VNDirect's statistics.
In the first seven months of 2023, the total value of corporate bonds issued via private placement reached over VND61.65 trillion ($2.6 billion), a year-on-year fall of 69.4%.
Bond redemptions before maturity also decreased last month to the tune of nearly VND13.99 trillion ($588.8 million).
Positive results were also seen in negotiations for changing bond terms and conditions between issuers and holders. As of July 26, 38 issuers had reached agreements with bondholders to extend the payment deadlines for bonds totaling VND52.5 trillion ($2.21 million).
"The pressure of maturing privately placed corporate bonds will continue to increase in August, while the list of companies making late payments as announced by the Hanoi Stock Exchange (HNX) continuing to rise," the broker said.
According to the HNX, as of July 26, 65 businesses had reported late bond coupon or principal payments, with total outstanding bond debt reaching VND172.62 trillion ($7.26 billion), accounting for 15.8% of the market. The majority of these issuers are real estate developers.
In a report released earlier this year, VNDirect estimated the maturity value of 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 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.
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.
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, said Minister of Finance Ho Duc Phoc.