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Besides seasonality factors, the bond market has been subdued in the early months of the year due to cautious sentiment among issuers amid tensions in the Middle East. The market lull is reflected in only five successful bond issuances in March, totaling about 16.2 trillion dong.
In the first three months of the year, corporates raised 24.8 trillion dong through bonds. This is up 33% year on year, but still less than half of the level recorded in December last year.
Banks and real estate continue to dominate issuance value, accounting for 90% of the total. The remainder comes from consumer, industrial, and securities firms.
VIS Rating analysts attribute the main cause of the lull to seasonality, citing the long Lunar New Year holidays. They also note that many issuers are cautious while waiting for shareholders’ meetings to approve business plans.
VIS Rating projects that the volume of new corporate bond issuances this year could be affected by the conflict in the Middle East region. The group says rising energy prices could put pressure on inflation, limit room for monetary easing, and push rates higher—raising funding costs for both banks and corporates. In a prolonged conflict scenario, business and investor confidence could decline, leading to delays in investment plans, reduced issuance demand, and weaker rollover capacity in the corporate bond market.
Banks and corporates raised nearly 590 trillion dong via the corporate bond channel last year. FiinRatings expects this figure to reach 800 trillion dong this year, surpassing the peak seen in 2021.
Mr. Le Hong Khang, Director of Research and Analysis at FiinRatings, said there are three drivers supporting growth in the primary corporate bond market:
FiinRatings added that beyond expanding issue size, the market must deepen. Depth is assessed by the diversity of issuing companies, product structure, the yield curve, and the level of information transparency. This, the analysts said, helps bond investors price risk more accurately and supports the economy’s ability to meet medium- and long-term funding needs.
Currently, up to 91% of issuances are offered via private placements, and more than 70% of bonds are issued by banks. Nearly 60% of outstanding corporate bonds in Vietnam have floating rates.
That share is described as very high compared with regional markets: Malaysia at 7.6%, Singapore at 0.6%, and Thailand below 0.1%. Experts say this reflects Vietnam’s market practice of anchoring capital market rates to the 12-month time deposit rate offered by large banks.
They characterize it as a paradox: bonds are fixed-income instruments by nature, yet funding costs and investment yields can vary significantly with deposit rates.
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