Topic: bond

The Vietnamese port city of Hải Phòng has set its sights high, outlining an ambitious plan to to mobilize billions dollars by tapping into socialized funding sources to propel urban development and bolster its infrastructure.

An update from the Vietnam Bond Market Association (VBMA), the Hanoi Stock Exchange (HNX), and the State Securities Commission (SSC) puts the total value of bonds redeemed before maturity at VND28.833 trillion ($1.2 billion) in September, up 199 per cent over the same period last year. The total value of bonds bought back by businesses in the first nine months of 2022 was VND142.209 trillion ($5.9 billion), up 67 per cent year-on-year.

Analysts have forecast that enterprises will face difficulties managing cash flows to repay bond principal and interest in upcoming quarters due to two reasons. Firstly, the corporate bond market has shrunk significantly since the beginning of the year, and secondly, cash flows into subsidiaries are controlled by Circular No. 16, Circular No. 39, and soon Decree No. 65. Meeting debt obligations is expected to be more difficult in the context of interest rates continuing to rise, which increases the burden of interest costs on many enterprises, especially those in capital-intensive industries where credit is difficult to access, like real estate.

At a seminar on the development of the corporate bond on September 13, analysts said the market has grown 30-35 per cent annually in recent years. If such growth can be maintained, the total market size will reach VND11.2 quadrillion ($473.68 billion) in the next six years, thus easing capital pressure on banks and credit institutions.

The VND270 trillion ($11.5 billion) in bonds approaching maturity combined with the impact of shrinking credit lines are creating a great deal of concern at banks. The State Bank of Vietnam has also said that bad real estate debts are showing signs of increasing rapidly, reaching more than VND36 trillion ($1.5 billion) as of June 30, up 5 per cent compared to the end of 2021.

Data from FiinGroup shows that bond issuances fell sharply in July, to VND22 trillion ($945.1 million), down 48.2 per cent compared to June and 65 per cent year-on-year. Notably, 19 of the 24 bonds issued were unsecured and/or have shares as collateral.

According to KBSV, the value of corporate bonds from real estate companies maturing in 2022 is VND123.4 trillion ($5.28 billion), of which unlisted real estate enterprises account for 84.5 per cent and listed groups 15.5 per cent. KBSV believes the large-scale listed real estate group is fully capable of making payments when bonds mature.