Corporate bonds find more takers in Vietnam

By Dat Nguyen   January 12, 2020 | 08:40 pm PT
Corporate bonds find more takers in Vietnam
Employees seen at a bank in Hanoi. Photo by VnExpress/Anh Tu.
Corporate bonds issuance increased by 25 percent to VND280.14 trillion ($12.12 billion) last year but remained a fraction of bank lending.

It was 11.26 percent of GDP, up from 9.01 percent in 2018, according to a report by top brokerage SSI Securities Corporation (SSI).

The corporate bonds outstanding at the end of last year were worth almost VND670 trillion ($29 billion).

While 211 business made issuances, most of them did so through private placement.

In a dong-denominated market, the only international issuance was by VPBank in July last year when it made a $300 million issue and listed it on the Singapore Exchange.

The average coupon rate was 8.8 percent and average maturity was 4.04 years.

Banks topped by issuing 41.2 percent of the bonds, followed by real estate firms with 38 percent.

Local organizations bought 80 percent of the bonds, and stock brokerages and banks, the rest.

Although Vietnam’s bond market has been growing in recent years, the money raised remains small compared to other sources.

"The economy is still dependent on bank credit, which was 138.4 percent of GDP at the end of 2019," the report noted.

The Asian Development Bank estimated Vietnam’s bond market to be worth 37.6 percent of GDP as of September 30 last year.

The ratio was the same as in the Philippines but lower than Japan’s 215 percent, South Korea’s 120 percent and China’s 60 percent, it added.

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