Vietnam bond market may be more vibrant in 2024: FiinRatings

Vietnam’s corporate bond channel will be more vibrant this year than in 2023, forecast domestic credit ratings agency FiinRatings.

FiinRatings gave four reasons for its prediction. Firstly, most banks will have plans to issue bonds to meet the credit growth target in 2024 (15%) and the following years. The additional capital will also increase tier 2 capital and contribute to better meeting the State Bank of Vietnam's (SBV) capital adequacy ratio and risk management targets.

Secondly, domestic interest rates are forecast to remain low, while international interest rates are on the decrease. As most current bond offerings follow a floating interest rate mechanism based on the reference interest rates of major banks, this will be a catalyst for bond issuers to anticipate an economic recovery in the second half of 2024.

Thirdly, consumer finance companies will enter a new cycle of growth, as debt collection problems at many units have been fixed. The real estate market will need more time to recover strongly, and solutions are required to help reduce legal risks so that investors can mobilize capital again, including through the bond channel.

Finally, investor confidence will gradually improve. FiinRatings has recorded a certain participation of professional individual investors in a number of individual bond packages issued by leading businesses.

The Ministry of Finance’s data shows that 7% of the more than VND300 billion ($12.3 million) individual bonds successfully offered in 2023 were purchased by professional individual investors. Despite being very modest compared to over 30% in the 2019-2022 period, it was a good sign after Decree 08 on the private placement of corporate bonds was put in place.

In the year to February 4, four Vietnamese companies made four bond issuances with a total value of VND6.45 trillion ($264.1 million), a modest figure compared to VND10.4 trillion in January 2021 and VND19.7 trillion in January 2022.

The total value of corporate bond transactions via private placement last month reached VND74.5 trillion ($3.05 billion), down 24.5% compared to the average level in December 2023.

A number of businesses have plans to issue bonds in the near future, including HBBank and VietBank and real estate developers Vingroup and DIG Corporation.

Companies in Vietnam raised a combined VND311.24 trillion ($12.77 billion) from selling bonds last year, up 22% year-on-year, Vietnam Bond Market Association data shows.

The amount included 29 public issuances worth VND37.07 trillion ($1.52 billion) and 286 private placements worth VND275.03 trillion ($11.28 billion).

Banks were the largest issuers with VND176 trillion ($7.22 billion), or 56.5% of the total, followed by real estate firms with VND73.2 trillion ($3.01 billion).