Prospects for credit growth and exchange rates will create favourable conditions for non-bank corporate bonds to recover in the final months of this year, analysts forecast.

Placing restrictions for individual investors in buying and selling private corporate bonds is a step in the right direction. Still, it’s important to ensure that capital flows from investment funds and other financial institutions stay undisrupted.

Analysts predict peak bond maturity pressure in the fourth quarter of this year, with the real estate sector facing the most significant burden at over 43% by October 4.

The major approach pursued by the Ministry of Finance (MOF) to changing some regulations on corporate bonds involves tightening control, but this may hinder the development of the bond market.

Numerous issuing organisations, notably those in the real estate sector, have sought debt restructuring for both principal and bond interest payments.

Bank bond issuance has surged to 96.2 trillion VND this year, a surge of 140% from last year, according to MB Securities (MBS).

Real estate enterprises are facing significant debt maturities of nearly 59 trillion VND (2.3 billion USD) and a rapidly rising delinquency rate in the sector.

Credit institutions had the largest outstanding bond debt by the end of 2023 with VNĐ357.2 trillion. The figure for real estate businesses was VNĐ351.4 trillion.

The ministry carried out inspections at 19 real estate companies and asked them to pay an addition of VNĐ255.7 billion to the State budget.

Rated corporate bond issuances in Vietnam still trail behind regional peers, though efforts to enhance credit rating culture aim to expand the market significantly.

The corporate bond market has stagnated, with new issues taking a nosedive to a mere VND14.8 trillion year-to-date.

The pressure of corporate bonds maturing in 2024 remains significant, with many businesses needing to pay trillions of Vietnamese dong in bonds that are due for investors.

In addition to simplifying issuance regulations, experts also said that a comprehensive solution is needed to remove legal barriers and develop investor bases.

Few companies are disclosing their plans to issue corporate bonds in 2024, except for some banks such as Vietcombank and VietCapital Bank.

Thanks to the government’s attempt to influence the economy plus decreasing bank interest rates, the corporate bond market has gradually recovered.

The bond market experienced a noticeable improvement in the latter half of 2023, but businesses still face challenges when it comes to issuing bonds in 2024.

Commercial banks have spent trillions of Vietnam dong to buy back bonds before maturity in the last months of this year.

Corporate bond buybacks before maturity had amounted to VND230.2 trillion in the year to December 25, up by 5.8% year-on-year, according to the Ministry of Finance.

The batch was worth VNĐ2 trillion with a rate of 12 per cent per year.