The Ministry of Finance (MOF) report on August 3 on corporate bond issuance showed that by July 28, 36 enterprises had issued corporate bonds privately with total value of VND62.3 trillion, down 77.8 percent compared with the same period in 2022.

Of this, real estate bonds accounted for the largest proportion (54.2 percent), followed by credit institutions (31.6 percent). More than 60 percent of bonds were issued with mortgaged assets.

According to the ministry, amid market fluctuations, many enterprises redeemed bonds before maturity to restructure their capital sources, totaling VND135.3 trillion, up 56.3 percent over the same period in 2022.

Private outstanding bonds by July 28 had reached VND1.02 quadrillion, accounting for 10.8 percent of 2022’s GDP, and 8.2 percent of total outstanding loans in the national economy. 

In the current difficult business conditions, many enterprises, considering the regulations stipulated in Decree 08/2023, have negotiated with bond holders on rescheduling the debt repayment deadlines. 

Some issuers in the real estate sector have reached agreements on extending payment deadlines from one month to two years with interest rates 0.5-3 percent higher. The companies include Sovico, Novaland and Hung Thinh Land.

The fact that bond issuers have negotiated with bond holders has helped calm investors, and it has given enterprises more time to restructure operations and recover their business, which will allow them to have money to pay debts when the bonds mature.

According to the agency, as the government and PM have instructed the Ministry of Finance and other ministries to apply serious measures, the corporate bond market has restabilized. However, the market has not fully recovered because of several factors.

The economy is experiencing a difficult period, and enterprises’ demand for capital is decreasing, while individual investors are becoming cautious after scandals related to banks’ distribution of bonds. Enterprises and institutions providing services are anxious about violations, and they are restricting the issuance of new bonds.

MOF believes that the demand for corporate bonds is decreasing because under the Law on Insurance Business, insurance companies are not allowed to invest in some kinds of products from 2023.

In related news, the Vietnam Association of Financial Investors (VAFI) has proposed a corporate income tax and personal income tax exemption for institutions and individuals investing in bonds.

Manh Ha