According to VNDirect's Q3/2024 Bond Market Report, private corporate bond issuance continued to heat up this quarter thanks to increased issuance by the banking group. In addition, businesses are actively buying back bonds before maturity, with a value of more than VND70 trillion.
The recovery of private bond issuance in the third quarter of 2024 continued to be contributed by the banking sector. This group issued more than VND 119 trillion of private bonds, accounting for 81% of the total value. For the real estate sector, issuance activities improved with a total issuance value of nearly VND 21 trillion.
A notable point is that the total value of individual corporate bonds bought back before maturity in the third quarter of 2024 reached nearly 70 trillion VND, an increase of more than 30% over the previous quarter.
Banks are still the group that makes the most buybacks, with a total value of more than VND59 trillion, accounting for 84.4% of the total value of early buybacks in the third quarter of 2024. The second largest group of buybacks is Real Estate, with a value of more than VND4.2 trillion.
VNDirect assessed that the negotiation activities to extend the bond term between issuers and bondholders will continue to be active in the third quarter of 2024. As of October 15, more than 100 organizations have reached agreements to extend the bond term of bondholders and have officially reported to HNX.
The total value of extended bonds is more than 156 trillion VND. Of which, bonds maturing in 2024 have been extended by nearly 59 trillion VND. Most of these extended bonds maturing in 2024 belong to the Real Estate group.
Along with that, the list of entities that are late in paying bond debt is also getting longer. As of October 15, 2024, there are more than 80 enterprises on the list of late payment obligations for interest or principal of corporate bonds according to the announcement of HNX.
The amount of principal debt due for late payment in the third quarter of 2024 is approximately more than VND 8.6 trillion. The total amount of principal debt due in the third quarter of 2024 of late-paying units and the value of bonds that have been extended is approximately more than VND 21.7 trillion.
VNDirect estimates that the total outstanding individual corporate bonds of these late-paying enterprises is about VND190 trillion, accounting for about 18.6% of the outstanding individual corporate bonds of the entire market. Most of them are enterprises in the real estate group.
VNDirect experts also forecast that maturity pressure will increase sharply again in the fourth quarter of 2024. It is estimated that in this quarter, there will be more than 76.7 trillion VND of individual corporate bonds maturing, nearly double that of the third quarter. The largest proportion is the Real Estate group with nearly 36% of the total value of maturing bonds.
It can be seen that, despite positive signals, the corporate bond market has not yet recovered to its pre-crisis level. Experts assess that most bonds issued and traded on the secondary market are privately issued bonds, or issued by newly established enterprises without core business activities, and therefore there is very little public information for investors to monitor and analyze risks.
Notably, nearly 50% of the cases of late bond payment in the period of 2022 - 2023 come from newly established enterprises with weak financial situation, but still issued at attractive interest rates in the previous period.
Currently, many bonds from this group of businesses are still being traded on the secondary market with yields not much different from those of companies with healthier financial situations.
Compared to more developed corporate bond markets in the region, Vietnam lacks the presence of institutional investors with long-term investment horizons and high risk tolerance to weather short-term fluctuations.
