Vietnamese firms return to bond racetrack

Vietnamese companies have begun to resume bond issuances after a hiatus due to the regulators’ handling of violations committed by some business leaders.

The value of private bond placements in November reached VND1.88 trillion ($76.28 million). This is a positive development in the context that the bond market is "frozen" and a series of companies are aggressively buying back bonds, according to the Vietnam Bond Market Association (VBMA).

The total value of bonds redeemed before maturity in the first 18 days of November exceeded VND7.5 trillion ($304.3 million), up 14 % over the same month in 2021. The 11-month figure was VND159.4 trillion ($6.47 billion), up 48% year-on-year.

From October 31 to November 24, the Ba Ria-Vung Tau Housing Development JSC, listed on the Ho Chi Minh Stock Exchange (HoSE) as HDC, raised VND30 billion ($1.22 million) in proceeds from issuance of private placement bonds. These are 24-month non-convertible bonds, with collateral and an annual interest rate of 11% applied for the first six months. HDC revealed that the holder of these bonds is a domestic securities company.

This was the fourth successful private offering in November. Previously, three companies successfully issued bonds through private placements, namely Masan Group with VND1.7 trillion ($68.98 million); City Auto JSC, VND50 billion ($2.03 million); and Duc Trung Investment JSC, VND100 billion ($4.06 million).

Nam Long Investment Corporation (HoSE: NLG) plans to additionally issue a maximum of VND500 billion ($20.29 million) worth of non-convertible bonds with collateral via private placements, with a maximum term of seven years.

Vietinbank's board of directors has just approved the amendment of the bank’s bond issuance plans as well as those for the use and repayment of capital raised from public bond offerings in 2022.

Accordingly, Vietinbank will issue a maximum of VND9 trillion ($365.2 million) of bonds instead of VND8 trillion as previously planned. They include VND3.5 trillion of eight-year bonds and VND5.5 trillion of 10-year bonds. These bonds will be issued in two phases, with the first from Q4/2022 to Q1/2023, offering VND5 trillion, and the second from Q2 to Q3 next year, offering VND4 trillion.

The “very hot” development of the corporate bond market in the 2018-2021 period posed many risks and dangers. Therefore, this year state management agencies have deployed strong solutions to make the market healthy, typically the arrests of leaders of Tan Hoang Minh Group in early April and of Van Thinh Phat Group in October. After these cases, the corporate bond market became nearly frozen.

Recently, the Ministry of Finance held a meeting with seven securities companies and 32 corporate bond issuers to seek measures to remove market difficulties.

In response to the proposals of securities companies and bond issuers, Finance Minister Ho Duc Phoc said his ministry would consider and if necessary, propose the government amend Decree 65 on private placement of corporate bonds in the direction of loosening regulations or applying a roadmap to support businesses to issue bonds via private placements.

Talking to the press on the sidelines of the meeting, Deputy Finance Minister Nguyen Duc Chi stated that the ministry would report the businesses’ proposals to the government and Prime Minister for immediate and long-term solutions to strengthen market confidence and help the market develop in a sustainable manner.

He also promised to ensure the legitimate interests of investors, so that they can soon return to the market, thereby helping businesses raise capital. At the same time, businesses are required to be fully responsible to investors according to their commitments.

He added that his ministry would review the legal framework and report the opinions of businesses to the Government and the Prime Minister for appropriate adjustments.