Corporate bond issuances, loans to rise sharply in H2: analysts

By Vien Thong   June 24, 2024 | 08:04 pm PT
Corporate bond issuances, loans to rise sharply in H2: analysts
Stacks of Vietnamese banknotes at a private bank. Photo by VnExpress/Thanh Tung
Businesses’ demand for funds is expected to rise in the second half of 2024, causing them to explore options like loans and bond issuances, credit rating agency FiinRatings said.

The demand would be spurred by growth in production and exports, the firm noted in a recent report on the corporate bond market.

The industrial production index is estimated to have increased by 6.8% from a year ago in the first five months of this year, with manufacturing rising by 7.3%, according to the General Statistics Office.

Exports have rebounded thanks to a recovery in demand in major markets, and imports of raw materials have also risen, the report said.

These are positive signs that businesses’ capacity to absorb capital has improved, it noted.

Meanwhile, credit to the property sector is forecast to grow as legal hurdles hampering real estate projects will gradually be resolved with new regulations soon to be effective, drawing more investment into that sector.

Lenders are forecast to soon hike deposit interest rates, and so businesses would take recourse to issuing long-term bonds with fixed interest rates to take advantage of the currently low deposit rates, it said.

Last month there were 26 issuances in the corporate bond market worth a total of VND23.2 trillion (US$911.3 million), up 20.6% from April and 6.1 times year-on-year.

Credit institutions accounted for 19 issuances worth VND16.5 trillion.

Also capitalizing on the low interest rates, banks have made bond issuances to raise medium- and long-term funds in preparation for the expected credit growth in the second half of the year.

According to the government, in the first five months loans outstanding only grew by 2.41%. The full-year target is 14-15%.

FiinRatings said however this target could be achieved as demand rises in the second half.

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