REAL ESTATE FIRMS ACCELERATE BOND SALES

The corporate bond market is expected to gain momentum as bank credit growth approaches its limit - PHOTO: LE VU

HCMC – Real estate businesses have stepped up corporate bond issues on the primary market, with value in April surging more than 110% compared to the same period last year.

According to a bond market report released by the Vietnam Bond Market Association (VBMA), based on data available as of May 8, one corporate bond issue worth VND2 trillion and belonging to the real estate sector was recorded in early May.

In April, the real estate sector led the market, with bond sales totaling around VND30.4 trillion, accounting for 58.7% of the total. The figure surged more than 110% year-on-year and marked the highest level recorded in the past six months, according to a report by MBS Securities.

Since the start of the year, real estate has remained the largest bond issuing sector, with total issuance reaching VND54.4 trillion, up 278% from a year earlier and representing 58.3% of overall issuance value. Average coupon rates stood at around 8.7%.

Bond maturity pressure in the market is still concentrated mainly in the real estate sector, while banks, despite issuing fewer bonds, have stepped up bond buybacks.

In the first four months of the year, around VND41.9 trillion worth of bonds were repurchased ahead of maturity, up 5.7% year-on-year. Banks accounted for 68% of the total repurchased value, up 172%.

According to FiinGroup, improvements in the legal framework and rising demand for infrastructure investment are supporting growth in Vietnam’s primary bond market.

Demand for large-scale infrastructure financing is increasingly shifting from bank loans to the bond market as credit growth limits constrain bank lending.

Despite this trend, major non-bank corporations remain cautious about bond issuance, as bank credit can be disbursed more quickly and at more competitive rates.

The bond market also continues to face several challenges, including the absence of a reliable benchmark pricing system that makes issuing costs difficult to estimate, while collateral requirements remain a barrier for non-bank issuers.

Source: The Saigon Times