Corporate bond market to thaw this year

By Tat Dat   February 10, 2024 | 07:05 pm PT
Corporate bond market to thaw this year
An employee counts Vietnamese banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy
Renewed confidence in the market and low interest rates will draw investors and action to the bond market this year, according to credit rating agency FiinRatings.

This year to date, the corporate bond market has had four public bond issuances totaling VND6.45 trillion (US$264.7 million).

Compared to the prime periods when public bond issuance reached VND10.4 trillion and VND19.7 trillion in January 2021 and January 2022, respectively, the figure for this month is still quite low.

However, it is still a significant improvement from the VND490 billion last January, according to a recent report by FiinRatings.

Along with that, the total value of private placement bonds last month reached VND74.5 trillion, down 24.5% from last December.

Looking toward 2024, the market will likely grow more active thanks to several factors, FiinRatings said.

In recent months, the firm has recorded a steady increase in the number of professional individual investors buying bonds in the market.

Data from the Ministry of Finance shows that 7% of over VND300 trillion worth of private placement bonds in 2023 were purchased by professional individual investors.

FiinRatings concluded that these positive signals mean that investors are regaining their confidence in the corporate bond market.

Most banks will have plans to issue bonds to boost their tier 2 capital in 2024 in order to help them expand credit activities to meet credit growth targets of 15% per year and satisfy the capital adequacy and risk management requirements set by the State Bank of Vietnam.

Bonds from the banking sector, including both short- and long-term bonds, are some of the most in-demand bonds on the market.

Vietnam’s interest rate is forecasted to remain low and international interest rates will likely decrease, the firm said.

The fact that most bonds will come with floating interest rates based on major banks’ reference interest rates will create favorable conditions for businesses to issue more bonds, according to analysts.

According to currently available information, some large companies have announced bond issuance plans this year, such as private lenders HB Bank and VietBank, and property developers Vingroup and Development Investment Construction Corporation.

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