A construction site in Đà Nẵng City. The real estate business accounted for around 73 per cent of the total delayed bond payments. — VNA/VNS Photo

Ly Ly Cao

HÀ NỘI — More companies reported delaying paying principal and interest on bonds in the second quarter, with a total outstanding payment of nearly VNĐ24.3 trillion (US$1.02 billion) due, according to a report on corporate bonds from MBS Research.

For the first six months of the year, about 82 firms reported late or delayed payment of bond principal and interest, bringing the total estimated value of deferred bond payments to VNĐ183 trillion (US$7.71 billion), representing 17 per cent of the total market for corporate bonds in the country.

The real estate business accounted for around 73 per cent of the total delayed payments.

The corporate bond market, on the other hand, showed signs of recovery in the second quarter, particularly in June, with more than VNĐ30.6 trillion in bonds issued.

For the first half of 2023, nearly VNĐ65.3 trillion worth of bonds were released, a decline of 65 per cent over last year, according to MBS Research. This is a tough time for the market, as the issuance value has fallen sharply in the last five years.

During the period, the weighted average maturity of mobilised bonds was 3.79 years, while the average deposit interest rate was 10.1 per cent, higher than the 2022 average rate of 7.9 per cent. 

The real estate sector recorded the highest issuance value in the first six months of 2023, accounting for more than 50 per cent of the total value of issued bonds since the beginning of the year. 

Notable issuances from the property developers were a batch worth VNĐ7.2 trillion of Hưng Yên Urban Investment and Development Company Limited, followed by a release of VNĐ4.7 trillion bonds of Nam An Investment and Trading JSC and nearly VNĐ4.7 trillion bonds of Southern Star Urban Development and Trading Investment JSC.

The banking industry also witnessed active issuance activity in the last quarter with a value of VNĐ19.8 trillion, accounting for 55 per cent of the total issuance value. 

In the first half of the year, ten banks mobilised VNĐ20.2 trillion of bonds at a rate of 31 per cent. The weighted average maturity of bank bonds is 4.02 per cent per year, while the average interest rate is 7.5 per cent. 

Techcombank, TP Bank, HDBank, and Orient Commercial Joint Stock Bank (OCB) were among the largest bank bond issuers during the period. 

In the second quarter, businesses, especially the banking sector, accelerated the purchase of corporate bonds before maturity. 

So far this year, the total value of bonds bought back before maturity by businesses reached more than VNĐ115.4 trillion, up 48 per cent over the same period in 2022.

Negotiation is key

According to the Hanoi Stock Exchange (HNX), as of July 13, the value of deferred corporate bonds is about VNĐ44 trillion. Of which, only about VNĐ18 trillion has been negotiated by the issuers with the bondholder, including swapping with other assets, extending, and changing conditions and terms.

Pressure on mature corporate bonds is rising in the last two quarters, while many issuers continue to struggle with company operations and cash flow, according to VNDirect Securities Corporation.

As a result, negotiations to extend the maturity of bonds is one of the best solutions for issuers to have more time to recover their production and business and build enough cash flow to pay back their debts, the securities firm added. 

In 2023, VNDirect estimates the value of maturing corporate bonds at about VNĐ223.4 trillion, an increase of 45.6 per cent year-on-year.

In the third quarter, more than VNĐ75.9 trillion of corporate bonds will mature, up 14.9 per cent over last year.

New corporate bond exchange

The private placement of corporate bonds trading system was formally launched on July 19.

Within three months, around 1,200 private bond issuances worth VNĐ1 quadrillion will be listed on the platform.

However, the liquidity of the system in the first trading week was poor with a value of just VNĐ2 trillion. And it is expected to be unable to improve immediately due to a time lag when all bond codes were required to register for trading and comply with legal regulations.

Cấn Văn Lực, chief economist at BIDV and member of the National Financial and Monetary Policy Advisory Council, believes transactions on the trading system will improve shortly. 

"The system is newly opened, so it takes time for investors to learn about it. I think in the near future, when more investors know about the system and see its benefits and the exchange runs smoothly, then it will certainly be better," Lực told Việt Nam News. — VNS