Corporate bond market can exceed $100B: minister

He told journalists recently that the corporate market was now VND1 quadrillion, or 10% of GDP, which he considered low.

The government wants corporate bonds to account for 25% of GDP to help businesses grow, he said.

Vietnam’s corporate bond market recorded substantial growth of 45% annually between 2018 and 2021, according to financial data platform FiinRatings.

In mid-2022 corporate bonds accounted for 14% of 2021 GDP, or nearly VND1.5 quadrillion. This was equivalent to 12% of all banks’ outstanding loans.

The bond market, however, faced challenges in the end of 2022 and early 2023 after property developer Van Thinh Phat chairwomanTruong My Lan was arrested for using bonds to defraud investors through lender Saigon Commercial Bank.

The government in March last year issued a new decree which allowed issuers to extend payments by two years if holders agree, a move to help ease the burden for businesses who had issued large lots.

After the decree came into effect, 78 companies issued bonds worth VND236.6 trillion.

This year bonds worth VND310 trillion are set to mature. Most of them belong to property developers (34.9%) and banks (29.7%).

Nguyen Tung Anh, director of research at FiinRatings, said that the market still needed time to regain confidence from investors. Some companies, especially property developers, might have to delay their payments.

Minister Phoc advised companies to not use new loans to cover old loans which could lead to higher risks of default.