Vietnam corporate bond market size may rise 150% to hit $100 bln: minister

Vietnam's total outstanding corporate bonds issued via private placements may reach VND2,500 trillion (roughly $102 billion), or 25% of the country’s GDP, considerably up from the current 10% of GDP, said Minister of Finance Ho Duc Phoc.

Corporate bonds remain a good alternative for local companies to mobilize funds, but issuances must be conducted in compliance with the law and for the right purposes as announced, Phoc told local media in a recent interview.

After the doldrums seen in the local corporate bond market caused by several notorious scandals, such as Van Thinh Phat-SCB and Tan Hoang Minh Group revealed in 2022 that hurt investor sentiment, the finance ministry advised the government to issue Decree 08 last year that helped firms sell bonds in a more disciplined and transparent manner.

Before experiencing a slump, the local corporate bond market had grown strongly in the 2018-2021 period, with an annual growth rate of 45%. Its size at one point reached almost VND1,500 trillion ($61.4 billion), or 14% of GDP, according to financial data provider FiinRatings.

With Decree 08 in place allowing the delay of corporate ratings, 78 companies raised VND237.4 trillion ($9.7 billion) from bond sales via private placements in 2023, indicating a recovery, finance ministry data showed.

Four companies, including Vingroup and Ho Chi Minh City Infrastructure Investment JSC, both listed on the Ho Chi Minh Stock Exchange, raised a combined VND6.45 trillion ($263.6 million) from bond sales in January, FiinRatings said in a recent report.

The figure is much higher than the VND490 billion ($20 million) recorded in the same period in 2023, but lower than the VND10.4 trillion ($426 million) posted in January 2021 and VND19.7 trillion ($806.6 million) in January 2022.

For 2024, conglomerate Vingroup plans to issue VND8.42 trillion ($344.7 million) while DIC Corp. plans to raise VND2.1 trillion ($86 million) from bonds. HDBank aims to sell VND2 trillion in notes and VietBank VND1 trillion.

FiinRatings analysts expect a busier corporate bond market versus 2023 because banks are boosting bond sales to meet credit growth demand; low interest rates, rising demand for bond sales from financial, real estate, consumer goods, and logistics companies, and improved investor confidence.