KBC failed to buy back bonds
Kinh Bac Urban Development Corporation - JSC (KBC), chaired by Mr. Dang Thanh Tam, has just announced the results of the early buyback of publicly issued bonds (code KBC121020). The bond lot has a total value of VND 1,500 billion, with a term of 2 years. The issuance date is June 24, 2021, and the maturity date is June 24.
According to KBC, during the period from May 11 to 15, the company was only able to buy back 3.43 million bonds, out of a total of 7.5 million bonds (equivalent to 750 billion VND) offered for early repurchase.
At the beginning of 2023, KBC had a total outstanding bond balance of VND3,900 billion. In the first quarter of 2023, this enterprise paid its debt on time and bought back individual bonds worth VND2,400 billion in advance. Thus, after buying back VND343 billion in advance, the total value of corporate bonds that KBC has left is more than VND1,157 billion.
Previously, in early April, KBC announced that it had arranged capital and wanted to completely buy back the bond debt.
However, KBC's desire to "clean up" its bond debt may not be possible in the context that bondholders do not agree to resell.
This is a negative signal in the corporate bond market, contrary to the situation where many bondholders are eager to get their money back in the context that many units continue to not/delay payment of interest and principal of bonds in the recent past.
Some businesses such as Phat Dat Real Estate (PDR), Novland (NVL), Thai Tuan… continue to postpone maturity dates and increase bond interest rates.
KBC has maintained good business performance, the bond market is more stable after support policies and deposit interest rates in the banking system are on a downward trend.
On May 25, the State Bank reduced its operating interest rate for the third time in less than 3 months. Interest rates on bank deposits with terms of 1-6 months have dropped very quickly, down to only 5%/year, equivalent to the level during the Covid-19 pandemic.
Meanwhile, corporate bond interest rates of some organizations are quite attractive, mostly above 10%. The stability in business operations and steady cash flow make the bonds of these companies attractive.
Besides, the bond market is still considered an important capital attraction channel for the economy and is protected to develop strongly in the coming time.
Corporate bond market less gloomy
At the online seminar with the theme "Macroeconomic stability and corporate bond market development" organized by the Government Electronic Information Portal yesterday, corporate bonds were assessed as an important capital attraction channel for national development.
Associate Professor, Dr. Vu Minh Khuong, Lecturer at the Lee Kuan Yew School of Public Policy, said that looking at countries that have created miraculous development, the bond market plays a very important role, accounting for 100% of GDP, of which about 50% belongs to businesses and 50% belongs to the Government.
According to Dr. Khuong, investing in things that create value is not a waste. When a dollar is invested in the right things, in the right direction, it will create a lot of profit, helping to grow very quickly, very miraculously.
Accordingly, Vietnam needs to pay special attention to the issue of building a healthy bond ecosystem.
Associate Professor, Dr. Vu Minh Khuong said that, according to world experience, bonds are issued in 3 types. One is to buy insurance. When buying insurance, people can buy with confidence, because the insurance company has checked the bond's quality very carefully. The second type is to issue bonds but with a guarantee. The third type of bond is the type that is completely unsecured, without insurance, there must be at least 2 companies to evaluate the experience, capacity, and appraisal to help people feel secure.
Despite initial positive signals after restructuring and debt extension policies, the corporate bond market remains gloomy and the pressure to mature corporate bonds in the last 6 months of the year is still high.
According to HSC Securities, the volume of overdue bonds could reach VND77,400 billion by the end of the year, peaking in September 2023. About 110 issuing enterprises are at risk of not being able to pay the principal and interest of bonds on time.
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