Real estate corporate bonds less active

Real estate companies in Vietnam issued VND820 billion ($35.4 million) in corporate bonds in April, a significant fall from the monthly average of $1.12 billion in 2021, according to top broker SSI Securities.

The total amount of issued bonds, in both private placements and public offerings, in the first quarter of 2022 reached $2.67 billion, up 34% year-on-year, but down 74% quarter-on-quarter, indicating fewer dynamic activities in the primary market, SSI noted in a report.

The corporate bond market continued to function rather normally in Q1. However, the broker believed that the government's tightening measures to restore order and improve market transparency and publicity had an influence on issuers and investor sentiment. "Therefore, enterprises postponed their release plans to await more specific guidance from the government."

Meanwhile, real estate firms still actively promoted the issuance of corporate bonds in Q1, with a total volume of $1.65 billion, up 31.6% year-on-year, accounting for 62% of the total issuance. The issues were deployed mainly in January and March, well ahead of the cancellation of Tan Hoang Minh's nine bond issuances.

Vietnam’s stock market watchdog on April 4 called off nine separate bond issuances totalling about $439 million in value by three companies under Tan Hoang Minh Group due to its provision of “untrue information”.

After the cancellation, enterprises and investors became wary of the method of capital mobilization through bond issuance.

"The majority of bond issuers in the previous two months have been large listed firms, credit institutions, or financial institutions, which are already subject to stringent control from the State Securities Commission and the State Bank," the report noted.

SSI Research forecasts the corporate bond market would be less active in the near future, at least until the government announces clearer policies in Q2/2022. However, demand for corporate bond issuance remains high since interest rates are expected to remain positive in 2022, and the demand for issuance to guarantee business capital turnover stays strong.