Private corporate bond market exceeds $28 billion in a year

The liquidity of private corporate bonds has also strongly increased from a year ago. — VNA/VNS Photo

HÀ NỘI — The commencement of private corporate bond market operations has significantly bolstered market transparency and mitigated risks for investors, especially retail traders, said the Hà Nội Stock Exchange (HNX).

On July 19, 2023, the private corporate bond trading system was inaugurated at the HNX, introducing centralised trading via negotiated transactions through trading members.

This system offers immediate or end-of-day payments, managed by the Việt Nam Securities Depository Centre (VSDC) for bilateral settlement.

Its operation enhances market transparency and reduces investor transaction risks in the corporate bond market.

According to HNX, at the market’s opening, there were 19 private corporate bond codes from three issuers, valued at VNĐ9.06 trillion (US$359.3 million). By the end of 2023, the system had 887 bond codes from 249 issuers, worth VNĐ617.6 trillion.

As of June 30, the market had grown to 997 bond codes from 259 issuers, with a value of over VNĐ706.2 trillion ($28 billion).

The trading member system expanded from five at launch to 36 by the end of 2023 and by the end of June, there were 48 members, including 44 securities firms and four banks, with 45 of them trading on HNX.

The liquidity of private corporate bonds has seen a significant enhancement.

The average trading value per session surged from VNĐ250.6 billion during the market’s inaugural month to VNĐ1.88 trillion by the close of 2023. By the end of June, this figure had further soared to more than VNĐ4 trillion per session.

Since the system’s inception until June 30, bonds from credit institutions dominated the market, constituting 45.7 per cent of total transactions, equivalent to a value of VNĐ324.2 trillion. Meanwhile, bonds from real estate companies accounted for approximately 30 per cent of the market’s trading value, reaching nearly VNĐ212.6 trillion.

The majority of issuing entities belong to the credit sector, representing 63 per cent of the market, while real estate firms constitute 24.9 per cent of the total issuance value.

The average capital mobilisation cost across the market is 7.52 per cent annually. Specifically, bonds from credit institutions offer the lowest interest rate at 6.01 per cent per year, with the commercial and service sectors at 10.76 per cent and other sectors at 10.87 per cent.

Issuing organisations also conduct early bond repurchases, with a cumulative value of bonds repurchased reaching VNĐ182.9 trillion.

HNX plans to work with associated entities to continue refining the technological infrastructure of the trading system to better cater to market needs.

It aims to enhance and update the specialised information platform for private corporate bonds in alignment with Decree 65/2022/ND-CP and Circular 30/2023/TT-BTC.

Issuances double in seven months

According to the Ministry of Finance (MoF), companies issued VNĐ161.5 trillion ($6.43 billion) worth of bonds in the first seven months, 2.6 times higher than the same period last year.

Credit institutions accounted for 67.5 per cent of the value, property enterprises some 24 per cent and businesses of other industries 8.5 per cent.

As much as VNĐ24 trillion worth of covered bonds was released during the span, with those by realty firms making up 84.4 per cent.

Some VNĐ88.8 trillion worth of bonds were redeemed during the period, down 36 per cent year-on-year. — VNS