Real estate and construction firms to buy back over $710 million in bonds

Specifically, this month, real estate enterprises must pay $456.5 million of bonds due, equal to 60 per cent of the total bond value reaching maturity. Construction firms need to pay $256.5 million, accounting for 34 per cent of the total bond due volume.

If the number of bonds redeemed before maturity was included, the payment pressure on enterprises would be much greater. As of December 30, the total value of bonds bought back before maturity was $9.15 billion, up 46 per cent on-year.

Meanwhile, the amount of new corporate bond issuance has decreased sharply. Throughout 2022, the value of bonds issued to the public amounted to just $460.8 million, down 65 per cent and equal to about 4 per cent of the total issued value. Private bond issuance retail value reached $10.6 billion, down 66 per cent and accounting for about 96 per cent of the total issuance value.

The 2023-2024 period is considered to be the peak of bond maturity with an estimated due value touching $30.4 billion.

According to KB Securities Vietnam, based on the number of months with bonds reaching maturity in 2023, the middle of the year will be a stressful period for the market when the bond maturity pressure is greatest.

The 2023-2024 period is considered to be the peak of bond maturity with an estimated due value touching $30.4 billion.

At the same time, investor confidence has decreased recently, causing new issuance to drop sharply and it is unlikely to recover in 2023. Moreover, domestic and international interest rates have spiked, causing investment cash flows to shift to savings channels.

Data from the VBMA shows that, from the beginning of 2022 to December 23, the value of new bond issuance (both public and private) approximated $11.1 billion, down nearly 62 per cent on-year.

Bond issuance to the public shed 61 per cent, accounting for 4 per cent of the total issued value, while corporate bonds issued privately decreased by 63 per cent, equaling 96 per cent of the total issued value.

General secretary of the VBMA Do Ngoc Quynh said that the corporate bond market in 2022 also witnessed an abnormality as the amount of early redemption increased dramatically.

According to the VBMA’s data, from the beginning of the year to December 23, the total value of bonds bought back by businesses totalled nearly $8.7 billion, up 42 per cent over the same period in 2021.

The abnormal increase in premature repurchases was primarily caused by a wave of bond sales, although also due in part to an unfavourable market.

If deducting the number of bonds repurchased before maturity, in 2022 businesses would have raised only $2.4 billion through the bond channel, equal to one-tenth of the net issuance volume in 2021.

In 2021, businesses successfully issued new bonds worth $28.6 billion, while they only bought back just over $5 billion ahead of time.

After inspecting 21 securities companies and nine issuers since last October, 14 units were found violating bond issuance regulations, said Le Cong Dien, director of the Public Enterprises Supervisory Department under the State Securities Commission (SSC).

Building a solid and long-term legal basis for corporate bond issuance was an urgent solution to build a capital market for the real estate sector.