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Jul 26, 2022 / 21:03

Vietnam's corporate bond market estimated at US$11 billion in H1

In the six months, companies have also bought back corporate bonds worth VND62 trillion ($2.65 billion) before their maturity date.

Vietnamese companies issued bonds worth VND258 trillion (US$11 billion) during the first six months of 2022, according to the Ministry of Finance (MoF).

 Corporate bond issuance has returned to an upward trend since May. File photo

The MoF noted while the volume of corporate bond issuance was on the decline from February to April, the figure was on the tendency to rise since May.

The value of corporate bond issuance in March and April stood at VND48.8 trillion ($2.1 billion) and VND30.6 trillion ($1.3 billion),  respectively,  before going up to VND44.2 trillion ($1.9 billion) and VND47.5 trillion ($2 billion) in May and June, in that order.

In the six months, companies have also bought back corporate bonds worth VND62 trillion ($2.65 billion) before their maturity date, including VND49.1 trillion ($2.1 billion) in the second quarter, a move that is seen as an attempt to pay off their debt early and benefit from favorable interest rate drops.

The MoF called for individual investors to stay cautious when purchasing corporate bonds, which is different from banks’ savings.

“Companies would be solely responsible for any payments related to bond issuance,” stated the MoF, adding investors should be aware of the risks in case the issuers in subject  default.

In addition, with the majority of guaranteed assets for corporate bonds being stocks or real property projects, volatile real estate and stock markets may cause negative impacts on companies’ repayment capabilities, noted the ministry.

Securities company VnDirect noted that a decrease in corporate bond issuance in early 2022 was due to the entry into force of Circular No.16 of the State Bank of Vietnam dated January 15, 2022, which establishes stricter regulations for credit institutions in transactions related to corporate bonds.

During the first quarter real estate companies made up the largest portion of bond issuance with 40.2% of the total value, or VND15.8 trillion, up 25.2% year-on-year but down 86.5% quarter on quarter.

The construction and finance-banking sectors claimed the second and third spots with 34.8% and 18.8% respectively.