Vietnam corporate bond market warms up after doldrums

Vietnam’s corporate bond market is showing signs of warming up after a period of stagnation caused by scandals at real estate conglomerates and the finance ministry’s regulatory tightening.

Between December 1 and 22, local companies issued 25 tranches of bonds in private placements worth a combined VND16.48 trillion ($678.2 million), down 54.1% month-on-month but tripling the same period last year, according to data compiled by VNDIRECT Securities.

Banks have remained the biggest issuers this month, accounting for nearly 81% of the issued volume, followed by real estate developers with 12.1% of the bond value.

In November, there were 27 corporate bond sales privately placed with a combined value of VND27.47 trillion ($1.13 billion), 14 times higher than a year earlier.

In the year to December 22, the volume of corporate bonds sold via private placements reached VND249.21 trillion ($10.25 billion), with little change from the same period last year.

Looking back on the performance of the corporate bond market over the past year, new issuances almost stalled between October 2022 and February 2023 after the police disclosed violations at Van Thinh Phat Group and Tan Hoang Minh Group.

Bond issuances started to recover in June this year after the government issued Decree 08/2023, which suspended a number of restrictions regulated by Decree 65/2022 on privately-placed corporate bond issuance.

Thanks to that relaxation, bond issuances have averaged VND25 trillion-VND35 trillion ($1.44 billion) monthly since.

Nguyen Hoang Duong, deputy head of the Department of Banking and Financial Institutions under the Ministry of Finance, noted more positive notes on the market after Decree 08 took effect, with bond volumes increasing month after month.

In 11 months through November, 77 companies raised some VND220 trillion (roughly $9 billion), Duong added.

Decree 08 also permitted issuers to negotiate terms on extending maturities or delaying bond liquidation with bondholders.

VNDIRECT data showed that in the first 11 months this year, 64 issuers successfully extended maturities of their bonds, with a value of VND111 trillion ($4.57 billion).