Corporate bond issuance doubles

April’s corporate bond issuance almost doubled over March as companies mobilized funds to reboot production after the limitations imposed by the Covid-19 pandemic.

An employee counts Vietnamese banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy.

Issuance value last month reached VND30.1 trillion ($1.3 billion), up 1.8 times over March. This nearly matched the value of the first three months at VND35.5 trillion ($1.5 billion), according to brokerage Bao Viet Securities Jsc (BVSC).

The surge followed Vietnam’s easing of its social distancing campaign on April 23, after asking businesses to let employees work from home and shutting down non-essential services to curb the spread of the virus.

Banks accounted for nearly half the value of bonds issued at 48 percent, with the issuance value surging 15 times from the first quarter to VND14.4 trillion ($618 million) in April.

Real estate firms followed with VND9.6 trillion ($412 million), accounting for 32 percent of the total.

As companies faced challenges accessing preferential credit from banks, corporate bond issuance was expected to remain dynamic, BVSC analysts said.

However, amid the rising trend of individual investors buying corporate bonds, the Ministry of Finance has recently advised prudence in pouring money into this channel, because the higher the coupon rate, the higher the risks.

Buying bonds guaranteed by banks and brokerages should also be carefully considered as these organizations could fail to fulfill its commitments due to financial difficulties, it said.

The ministry in February proposed more stringent regulations for corporate bond issuance  to protect investors, after some companies made issuances worth 50 times and 100 times their equity.

The value of corporate bond issuances increased by 25 percent from 2018 to VND280 trillion ($12 billion) last year, according to the SSI Securities Corporation.


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