Real estate companies remain passive in bond market

Real estate companies remain passive in bond market

The ongoing challenges in this sector are underscored by the increasing volume of early bond redemptions, which reached nearly VNĐ9.6 trillion in March alone.

There were no new bond issuances from property developers in the first quarter of 2025. — Photo vtv

The domestic corporate bond market experienced a notable resurgence in March, primarily driven by active issuances from the banking and securities sectors. However, real estate companies have remained conspicuously absent, failing to participate in any bond issuances during the first quarter of the year.

According to a recent report from MB Securities (MBS Research), the corporate bond market saw a significant uptick in activity, with eight new issuances totalling nearly VNĐ17.2 trillion (US$661 million). This represents more than a seven-fold increase compared to the previous month and a 7.3 per cent rise year-on-year. 

Notably, banks accounted for a substantial 68 per cent of the total issuance value, highlighting their pivotal role in this market revival.

Among the significant issuances in March, HDBank raised VNĐ5 trillion with maturities ranging from 84 to 96 months, offering interest rates between 7.38 per cent and 7.58 per cent per annum. Similarly, LPBank secured VNĐ3 trillion with maturities of 84 to 120 months at rates of 7.58 per cent to 7.88 per cent, while MBBank issued VNĐ 2.2 trillion with a 72-month maturity at an interest rate of 6.18 per cent.

The push by commercial banks to raise capital through bonds is seen as a strategy to enhance their lending capabilities amid a rapidly recovering demand for credit. 

The State Bank of Việt Nam (SBV) reported a credit growth rate of 3.9 per cent by the end of the first quarter, which is 2.5 times higher than the same period last year.

Year-to-date, the total value of corporate bonds issued has exceeded VNĐ25.1 trillion, reflecting a slight decrease of 2.7 per cent compared to the previous year. However, the average interest rate for corporate bonds remained stable at approximately 7.2 per cent per annum, consistent with the averages seen in 2024.

There has been a surge in public bond issuances, with 11 transactions amounting to over VNĐ23.1 trillion, marking a significant 116 per cent increase year-on-year. The banking sector continues to lead this market segment, with total issuances surpassing VNĐ19.3 trillion, a 377 per cent increase compared to the previous year.

In contrast, the real estate sector has been notably inactive, failing to issue any new bonds while grappling with existing financial pressures. 

The ongoing challenges in this sector are underscored by the increasing volume of early bond redemptions, which reached nearly VNĐ9.6 trillion in March alone. While this reflects positive cash flows for some investors, the real estate sector accounted for 11.7 per cent of this total redemption value, indicating significant liquidity pressures within the industry.

Despite this activity, the bond market is still facing challenges, particularly regarding payment delays. 

In March, two companies disclosed their inability to meet principal and interest payments, totalling approximately VNĐ516 billion. 

As of the end of March, the total value of bonds in default or delayed payment is estimated to be around VNĐ209.3 trillion, representing about 20 per cent of the total outstanding corporate bonds in the market. 

Alarmingly, real estate companies constitute 69 per cent of the total defaults, suggesting that financial strains continue to mount in this sector. 

Bizhub