In the fourth quarter of 2022, there are about 85 trillion VND of bonds issued by banks and real estate enterprises set to mature.

A report on the corporate bond market of VCBS Securities Company shows that in the fourth quarter of 2022, about 85 trillion VND of bonds issued by banks and real estate enterprises are set to mature. The volume of corporate bonds maturing in 2023 and 2024 is estimated at 790 trillion VND.

VNDirect Securities Company also estimates that about 58.84 trillion VND of corporate bonds via private placements will mature in the fourth quarter of this year, of which the rate of bonds issued by real estate companies and banks accounted for 34.1% and 32.9%, respectively.

According to the 2022 semi-annual financial statement of a large bank headquartered in Hanoi, the total outstanding loans via the purchase of bonds reached 96 trillion VND. Of which, outstanding loans in corporate bonds were 74 trillion VND, accounting for more than 11% of total assets of 623 trillion VND. Data from the Hanoi Stock Exchange (HNX) shows that from August 2023, this business will have to pay thousands of billions of dong of bonds issued by itself.

For real estate enterprises, the data of HNX also shows that by December 2022, there are hundreds of billions of dong of bonds issued by realty companies to mature. For example, there are two medium-sized real estate enterprises in HCM City that are due to pay a total amount of 500 billion VND in corporate bonds by the end of this year. In addition, dozens of other businesses have to pay tens of thousands of billions of dong of corporate bonds in 2023.

Dr Le Dat Chi from Ho Chi Minh University of Economics said that banks lending money through the purchase of corporate bonds will have to turn the loan into bad debt if the issuer has difficulties and can not pay back at the due time, and the bank would have to use profits to make provision for this debt, negatively affecting business results. This factor is said to have a negative impact on banking stocks.

A financial advisor for large enterprises in HCM City said that the cash flow of enterprises always depends on banks and bond issuance. However, in the context of banks restricting lending, enterprises have only one option left, which is to issue new bonds to pay for the previous issuance.

According to Nguyen Van Dinh, Chairman of the Vietnam Association Of Real Estate Brokers, the immediate solution is that the management agencies guide the application of Decree No 65 on the issuance of private corporate bonds (Decree 65) so that enterprises can develop their own bonds and issue bonds in accordance with regulations.

VNDirect Securities Company said that this decree allows enterprises to issue bonds for the purpose of debt restructuring. This is one of the loosening points, helping businesses continue to issue bonds for the purpose of debt restructuring.

Nguyen Tung Anh, head of Research Group FiinRatings, said that after the recent adjustments, the size of the value of corporate bonds in circulation has decreased significantly.

"Improving information transparency and implementing new regulations of Decree 65 along with a specific assessment of credit quality and maturity risk in the coming period will be an important solution to restore the market's confidence, especially professional individual investors," said Tung Anh.

FiinRatings experts said that Decree 65 added stricter regulations on the method of offering and tightened the conditions for identifying professional individual investors. This will affect the demand for bonds by narrowing the distribution of corporate bonds. The Ministry of Finance and the State Bank of Vietnam are rolling out specific information and instructions, so the market will witness the return of issuance activities as well as an increase in the number of enterprises participating in this capital channel.

Specifically, the Ministry of Finance has just proposed the Ministry of Construction study and supplement regulations on the financial safety ratio of enterprises after granting construction and investment permits for real estate projects to ensure the development of the bond market.

The State Bank of Vietnam has also requested the Ministry of Construction review and amend regulations on credit institutions’ offering, investing and providing services on private placements of corporate bonds./.