The corporate bond market, which had been subdued for a prolonged period due to scandals involving firms like Tan Hoang Minh and Van Thinh Phat, is showing signs of revival. The year-end capital demand, coupled with a forthcoming regulatory shift, promises a transformative phase for the market.

Starting early 2025, the amended Securities Law will take effect, introducing groundbreaking changes. These updates include stricter guidelines for bond issuance and enhanced investor protections aimed at fostering long-term market stability.

The new law seeks to mitigate risks by requiring issuers to adhere to stricter criteria, such as debt-to-equity ratio limits, mandates for bondholder representatives, and credit ratings. Additionally, privately issued bonds sold to individual investors must now carry credit ratings and be either backed by bank guarantees or secured by assets.

This period offers an opportunity for organizations to align their fundraising plans with upcoming policy changes, paving the way for economic recovery in the coming year. Analysts predict a brighter outlook for Vietnam’s economy.

Real estate giants step up

On December 13, Vinhomes JSC (VHM), part of billionaire Pham Nhat Vuong’s Vingroup ecosystem, announced plans to issue up to VND 4 trillion in non-convertible, privately placed bonds with a 36-month term, secured by assets. This follows a successful issuance of VND 2 trillion in similar bonds on November 20.

Vinhomes' move comes after the company completed an unprecedented stock buyback campaign on the stock market, spending approximately VND 11 trillion to repurchase nearly 247 million VHM shares.

Meanwhile, VietJet Aviation JSC (VJC), chaired by billionaire Nguyen Thi Phuong Thao, plans to issue VND 2 trillion in unsecured, non-convertible private bonds.

Other corporations are also ramping up bond issuance. Huy Duong Group recently raised VND 900 billion through a five-year bond issuance with a 12.5% interest rate. Becamex IDC successfully issued VND 1.08 trillion in non-convertible bonds with a four-year term, offering an annual interest rate of 10.7%.

In September, Truong Loc Real Estate raised over VND 1.9 trillion in bonds, while Van Huong Investment and Tourism recently secured nearly VND 2 trillion in 36-month bonds. Nam Long Investment (NLG) also raised VND 1 trillion.

Statistics from the Vietnam Bond Market Association (VBMA) reveal that November alone saw 29 private corporate bond issuances, totaling over VND 24 trillion. Year-to-date figures for the first 11 months of 2024 reached nearly VND 375 trillion, with VND 343 trillion from private issuances. Banks accounted for the largest share at VND 270 trillion, followed by real estate companies at 17% (VND 64 trillion).

Real estate firms are aggressively raising capital through various channels, including bonds, to prepare for a potential rebound in the property market. Funds are being allocated to ongoing major projects, such as Co Loa, Dragon Hill, Vu Yen Billionaire’s Island, and others.

Additionally, many companies are using proceeds to handle the substantial bond maturities due at year’s end. Nam Long Investment, for instance, has allocated most of its recently raised funds toward repaying principal and interest for maturing bonds.

According to Mirae Asset Securities, around VND 39 trillion in bonds is set to mature in December, with VND 7 trillion tied to real estate firms. Among these, 16 bonds from 15 different companies are likely to miss their deadlines and may need extensions under Decree 08/2023/ND-CP. Most of these issuers operate in real estate development.

VIS Ratings reports that the total value of overdue bonds across the market reached approximately VND 189 trillion from April 2022 to November 2024. The energy sector has the highest default rate, while residential real estate bonds account for 60% of the overdue total.

US$1 = VND25,000

Manh Ha