Bond maturity pressure to surge in mid-2023

By Phuong Dong   February 14, 2023 | 06:30 pm PT
Bond maturity pressure to surge in mid-2023
An employee counts Vietnamese banknotes at a bank in Ho Chi Minh City. Photo by VnExpress/Thanh Tung
Corporate bonds worth VND273 trillion (US$11.57 billion) are set to mature this year, mainly in the second and third quarters, VNDirect Securities Corporation said.

The redemption values are VND30.6 trillion in the first quarter, VND93.14 trillion in the second, VND89.5 trillion in the third, and VND60 trillion in the fourth. They represent an increase of 76% from last year.

The property industry accounts for VND102.57 trillion, with Novaland, Saigon Glory Company and An Khang Real Estate Development Company accounting for the lion’s share.

The banking and finance industry is second with VND100.8 trillion.

Others such as construction, investment and trade account for VND69 trillion.

"In the context of the tight monetary policy, higher financial costs and tightening of bond issuance regulations, some issuers have little opportunity to access capital to ... meet their ... obligations," VNDirect analysts said.

Some industries with high leverage and cyclical volatility like real estate face solvency issues, they warned.

They said the confidence of retail investors, who account for a third of all bond transactions, has plummeted after the recent arrests of people for fraud and other violations in bond issuance and diversion of funds by some major developers like Tan Hoang Minh and Van Thinh Phat.

People have rushed to sell bonds, they said.

"Some private placement bonds are trading at 4-5% below par, with yields of 10-12% a year, meaning sellers are willing to offer discounts of 14-17%."

VNDirect expected the bond market to remain quiet in the first half of this year as firms postpone or cancel plans to raise capital.

According to data from the Hanoi Stock Exchange, there was only one successful corporate bond issuance -- worth VND110 billion -- in January.

Things could improve in the second half of this year, VNDirect forecast.

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