An employee handle a transaction at Bao Viet's office in Hanoi. (Photo: VNA) The scale of debt in the corporate bond market is less than 15% of GDP.Particularly, private corporate bonds make up 12.5% of GDP, equivalent to 1.19quadrillion VND, which is still a modest amount compared to other countries inthe region and also far from the target set by 2025.
However, with the developments of the market last year, Vietcombank SecuritiesCompany (VCBS) said that professional bond investors were unlikely to return tothe market this year.
The securities firm expected the size of the market to continue to shrink thisyear due to Decree 65's restrictions on new issuance and restructured issuance,and high new issuance costs. In addition, the volume of bonds bought backbefore maturity also reduces the market's overall size.
Other reasons are the medium-term maturity pressure on the market due to largematurity volume, low possibility of new issuance and existing interest rateuptrend.
According to VCBS estimates, the volume of corporate bonds maturing in 2023 isestimated at 250 trillion VND, a significant decrease compared to the thirdquarter of 2022 due to the proactive repurchase before maturity.
In particular, the acquisition value of the banking and real estate industriesin the fourth quarter reached 35 trillion VND and 24 trillion VND,respectively.
However, the trend of repurchasing before maturity helps enterprises andissuers be more proactive in bond capital payment demand. The move also showssignificant efforts to arrange capital, and reduce pressure on bond maturity inthe near future.
Moreover, high interest rate base and low investors' confidence in thecorporate bond market will make the market less appealing when consideringrisks and benefits.
For institutional investors, the investment demand for corporate bonds is alsoforecast to decrease as risk levels are expected to rise and the governmentbond investment channel has returned to an attractive valuation compared tomany years ago, causing a fall in the competitiveness of the corporate bondchannel.
In 2023, the inspection and supervision activities of issuing bonds in largequantities, without collateral, and using capital for improper purposes, willaffect the offering and issuance listing and trading activities. And securitiesinvestment and stock market will still be boosted.
2023 is also the year to accelerate the restructuring activities of bonds thatwill be due soon.
In general, VCBS believes that the corporate bond market will continue to be ina quiet period with low liquidity./.
VNA
