Has the corporate bond market experienced a "soft landing"?

ANTD.VN - Although the corporate bond market has gone through its most difficult period and the possibility of default is no longer present, the "peak" for bond debt has shifted to around the middle of next year. This requires comprehensive solutions to address the issue.

A bond default is unlikely.

According to data from the Vietnam Bond Market Association (VBMA), from the beginning of the year to mid-August 2024, the total value of corporate bond issuances recorded was VND 212,512 billion, with 13 public offerings worth VND 22,773 billion (accounting for 10.7% of the total issuance value) and 195 private placements worth VND 189,739 billion (accounting for 89.3% of the total).

In addition, businesses that repurchased assets ahead of schedule reached VND 111,910 billion, a decrease of 27.1% compared to the same period in 2023.

According to statistics from the State Securities Commission, as of the end of July 2024, the market size of listed corporate bonds reached approximately VND 773,000 billion, with 1,043 bond codes from 264 issuers recorded on the corporate bond trading system of the Hanoi Stock Exchange.

In the primary market, the value of successful issuances in the first seven months of the year reached over VND 174,000 billion, an increase of more than 2.78 times compared to the same period in 2023, with private placements accounting for 87% and public offerings accounting for 13%.

On the secondary market, according to trading data reported by the Hanoi Stock Exchange, as of the end of July 2024, the total trading value reached nearly 576 trillion VND, averaging approximately 4 trillion VND per session.

Thus, it can be seen that the corporate bond market has clearly warmed up, especially after the Government 's Decree 08 was issued, which removed some difficulties for businesses such as allowing businesses to negotiate and extend bond debt, postponing conditions for professional securities investors, and credit rating.

The bond market is gradually improving.

According to economic expert Dr. Can Van Luc, the story of corporate bond maturity, especially for real estate companies, can be said to have overcome the most difficult period (June - August 2023) since the issuance of Decree 08.

Mr. Luc stated that this year the bond market has 213,000 billion VND maturing, with real estate bonds accounting for 37%, equivalent to approximately 70,000 billion VND.

Essentially, 60% of businesses have extended their bonds for two years (reaching a peak in June 2025), proactively repurchasing bonds according to the issuance conditions and resuming issuance to reduce capital pressure. In addition, with the warming real estate market, businesses are willing to sell assets to allocate a portion of their proceeds to repay debt.

Therefore, the expert believes that default is unlikely because the most difficult period has passed, and there are many comprehensive solutions to address the issue. In reality, real estate businesses no longer need to offer 40-50% discounts like before; a discount of around 10% is enough to sell the properties.

Removing legal obstacles to resolve the "deadline" of bond debt.

However, many are concerned that since Decree 08 expired at the beginning of this year, the difficulties in the bond market could return to a challenging period when the "peak" for bond debt extension could fall in mid-2025.

According to Ms. Tran Kim Dung, Deputy Director of the Securities Offering Management Department, State Securities Commission, Decree 08 has expired, therefore the government's relaxation of regulations on private corporate bond issuance is temporarily on hold. Whether amending Decree 65 will allow for further negotiations remains to be seen, pending the opinion of the Ministry of Finance.

According to Mr. Pham Van Hieu, Deputy Head of the Financial Market Department, Banking and Finance Division, Ministry of Finance, the Ministry of Finance has reported to the Government on the implementation situation. Currently, according to the Government's view, some provisions that have been suspended or expired in Decree 08 will begin to be implemented under Decree 65 from January 1, 2024 (standards for professional investors and credit rating).

Two amendments to Decree 08 will continue to be implemented in accordance with the spirit of the Decree (debt extension, bond repayment with other assets). Regarding the study of amending Decree 65, the Ministry of Finance is reviewing and amending several articles of the Securities Law. Afterward, they will closely follow the Securities Law to amend Decree 65.

This means that businesses can still negotiate debt deferrals with bondholders in accordance with Decree 08. However, according to Mr. Nguyen Quang Thuan, General Director of FiinRatings, extending Decree 08 is not the biggest problem. The bigger issue is the very large amount of overdue debt in 2024-2025.

One way we can do this is by addressing the government's plan to remove legal obstacles in the real estate sector. Once this issue is resolved, dealing with overdue debts will be much easier.

"It should be noted that the largest source of funds is not bank loans or bonds, but money received from customers. This means that support from surrounding sources is also very important. We shouldn't just focus on rescuing bonds; the surrounding measures are far more important, namely ensuring legal 'cleanliness'," Mr. Thuan said.

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