Only one private bond issuance was recorded in October, indicating that companies remain reluctant to mobilize cash using this channel after recent arrests of alleged fraudsters.
Nui Phao Mining Company under the Masan Group was the only corporate bond issuer last month with a batch of VND210 billion ($8.45 million) with a five-year maturity.
This is very unusual as banks and property developers have been the biggest bond issuers in Vietnam for several years now.
Financial data provider FiinRatings said in a report that the rising interest rates, tightened bond regulations and recent violations in the market have restrained companies from mobilizing cash through bonds.
The alleged violations of An Dong Investment Group and other companies like property developer Tan Hoang Minh, as well as the arrests of their leaders, have raised red flags for businesses.
They are now buying back the bonds they have issued. Last month, VND5.8 trillion worth of bonds was bought back.
Banks accounted for 53% of the buyback value, followed by property developers at nearly 22%.
The buyback has helped ease payment pressure on companies this year as they only have VND21.85 trillion worth of bonds set to mature after November 15.
But next year, the value of bonds set to mature will be high, at VND119.05 trillion, and in 2024 it will be VND111.81 trillion.
FiinRatings analysts expect more debt restructuring moves to be carried out soon. Some of the methods being used are an extension of debt payment with new coupon rates, converting the bonds to long-term loan contracts with new interest rates, or converting them into property units.
“This is a positive signal for the current liquidity issues on the market as it helps reduce the payment burden in the short term for bond issuers,” they say.
With mobilizing capital domestically proving very difficult, companies are seeking international loans.
Ten major loans have been recorded recently with a total value of $1.92 billion, including that of the Masan Group ($600 million), VPBank ($500 million) and SeABank ($200 million).
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