Vietnam corporate bond market recovers, $12.7 bln raised in 2023

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).

In December alone, local companies raised VND42.81 trillion ($1.76 billion) from bond sales via private placements at an average coupon rate of 7.06% per year and an average term of 5.97 years.

They also bought back VND32.67 trillion ($1.34 billion) worth of notes before maturity last month, down 50.4% year-on-year. In 2023 as a whole, they bought back bonds worth VND241.95 trillion, up 5.3% year-on-year.

An estimated VND277.06 trillion ($11.36 billion) worth of corporate bonds will mature this year, 41% belonging to real estate firms and 20% corresponding to banks.

Deputy Minister of Finance Nguyen Duc Chi said at a regular government press meeting last week that the domestic primary corporate bond market has seen a remarkable change in bond buyers, with 92.4% of them being institutional investors.

Chi noted that investor confidence was recovering gradually and expected the market to enjoy substantial, sustained growth.

Vietnam’s corporate bond market took a hard hit in 2022 with mega scams involving real estate developers Tan Hoang Minh Group and Van Thinh Phat Group exposed in April and October, respectively, resulting in the arrests of their senior executives. A large number of desperate retail investors held protests to get their money back.

Firms held back from issuing bonds in 2022, with just VND255 trillion ($10.74 billion) worth sold in 2022, down 62% from 2021. They also bought back nearly VND200 trillion worth of notes before maturity as bondholders began dumping their holdings.

To invigorate the corporate bond market, the government adopted Decree 08/2023 on privately-placed bonds in March in an attempt to fix the corporate bond market. Among other measures, the decree granted a two-year extension in bond maturities conditional on shareholder approval.