Corporate bond issuance surges, redemption pressure persists
Corporate bond issuances in April jumped by 29.1% from March and a striking 5.2 times year-on-year to reach 13.94 trillion VND.
The construction of a building near Ben Thanh Market by Viva Land, a subsidiary of Van Thinh Phat Group, stalled at the end of 2022 following the arrest of the company’s chairwoman, Truong My Lan. (Photo: VNA)
HCM City (VNS/VNA) - Corporate bond issuances in April jumped by 29.1% from March and a striking 5.2 times year-on-year to reach 13.94 trillion VND.
According to a report by the Vietnam Bond Market Association, 13 issuances were made by six companies last month.
Total corporate bond issuance has reached 36,088 trillion VND since the start of 2024, of which public and private issuances make up 8.9 trillion VND and 27.2 trillion VND, respectively.
Companies redeemed bonds worth 37 trillion VND prematurely in the period.
But redemption pressure remains a concern, especially for the real estate and renewable energy sectors.
As of the end of last year outstanding corporate bonds were worth 1 quadrillion VND, according to a report by the Ministry of Finance.
The value of maturing bonds this year is 240.1 trillion VND, with the real estate sector accounting for 99.6 trillion VND, it said.
It has identified 18 out of 21 companies at risk of failing to redeem bonds worth 31.2 trillion VND this year.
A number of companies have been fined recently for failure to submit information such as financial statements, report on capital usage, principal payments, and bond interest.
The corporate bond market has seen significant growth in recent years, driven by demand for funding among property developers and banks.
However, problems such as the property market slump and investigations into financial fraud by major property developers recently have contributed to the current challenges.
The Government has hauled up the finance ministry and central bank for their poor management that led to the pro﷽blems./.
The volume of corporate bonds maturing in 2024, though lower than that in 2023, is till at a high level, mostly in industries with payment risks such as real estate and renewable energy, according to a report by the Ministry of Finance (MoF).
The corporate bond market is expected to remain relatively sluggish until the end of the first quarter of 2024, as conditions for issuing and trading corporate bonds tighten.
To promote the professional corporate bond market, one solution is to focus on widespread public offerings of corporate bonds rather than private placements, said experts.
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