Vietnam’s corporate bond market in 2021 surges by 56% to US$32 billion

In 2021, Vietnamese companies issued bonds worth a total of VND722.7 trillion (US$32 billion), a surge of 56% against the previous year, according to  SSI Corporation (SSI).

Vietnam's bond market witnessed a strong rise over the years. Photo: The Hanoi Times

Among firms, those in real estate make up the majority of bond issuers by issuing bonds worth VND318.2 trillion ($14 billion), or 44% of total corporate bonds issuance and up 66.3% year-on-year.

The SSI’s report estimated the number of real estate bond issuers rose from 141 in 2020 to 193 in 2021.

Meanwhile, banks have issued bonds of VND226.4 trillion ($9.9 billion), accounting for 31.3% of the total and up 73% year-on-year.

SSI, however, noted the total value of bonds from banks that were in circulation by late 2021 stood at VND540 trillion ($23.6 billion), or 39% of the market, which remained significantly lower than the 48% rate recorded in late 2018.

“This shows the size of the non-banking corporate bond market is on the rise,” stated  SSI.

Bonds from companies in fields of energy, mining, non-banking entities, and infrastructure development were around VND28-30 trillion ($1.2-1.3 billion), or 4% of total issuance.

Not only in terms of the proportion of bonds issued, but real estate companies are also of those providing the highest return rates.

For the past three years, bonds from property firms were offered at an annual rate of 10.3-10.6%, even up to 12-13%, the highest in the market, especially bonds of names such as Phat Dat Real Estate Development, Hoang Phu Vuong, Osaka Garden, Galatic Group, or Unity Real Estate Investment.

“Real estate companies are having a high demand for capital mobilization via corporate bonds, due to difficulties in accessing banks’ loans,” SSI said. “To attract investors despite the low quality of guarantee assets, they are forced to set higher yields compared to others,” it noted.

Meanwhile, the average yield from bank bonds had been on the decline from 6.34% per annum in 2020 to 4.31% in 2021, partly due to the short-term maturity period,   that of non-banking entities and others stood at around 8.4-8.54%.

On the primary market, banks and securities companies continued to be the largest bondholders by purchasing a total of VND373 trillion ($16.3 trillion) in bonds, or 52% of the total in circulation.

They mainly bought in bonds from banks for around VND154 trillion ($6.73 billion), or 68% of the amount issued by banks, focusing on those of short maturity period from one to four years, and VND153 trillion ($6.68 billion) of real estate companies, or 48% of the total.

15 commercial banks under survey by the SSI, accounting for 75% of the outstanding loans in the banking sector, held VND214 trillion ($9.35 billion) in corporate bonds, up 17% against late 2020, with names such as Techcombank, MB, VPBank, and TPBank as the largest buyers.