BondXpress May: Does the rising trend of deposit interest rates have an impact on the corporate bond market outlook?

The Vietnamese corporate bond market has shown positive developments recently. The secondary market in May 2024 recorded a significant increase of the trading value of privately-issued bonds to over VND 106 trillion. The banking and real estate sectors still accounted for the majority of transactions.

The Vietnamese corporate bond market has shown positive developments recently. The secondary market in May 2024 recorded a significant increase of the trading value of privately-issued bonds to over VND 106 trillion. The banking and real estate sectors still accounted for the majority of transactions. 

However, the pressure of bond maturities remains high in Q3 and Q4 of 2024, with the real estate sector accounting for 64% of the total mature corporate bonds, given the context that many businesses have to request an extension of repayment period and adjust their buyback plans. 

The report predicts a significant improvement in credit demand and bond issuance in the second half of 2024. This is attributed to the recovery of key economic sectors such as manufacturing and residential real estate. Bond issuance activities by banks are also expected to be more active due to the need to raise capital to meet credit growth demands. 

Key Highlights from the Report: 

• Rising deposit interest rates: The domestic deposit interest rates have increased over the past two months, posing risks to corporate bonds with floating rates. However, this serves as a catalyst for companies to accelerate the issuance of long-term bonds with fixed interest rates to benefit from the low interest rate environment. 

• Increased Demand for Credit and Bonds: Credit demand and bond issuance are expected to improve in the second half of the year due to the recovery of certain economic sectors. 

• Banks Boosting Bond Issuance: Bond issuance activities by banks are anticipated to be more dynamic due to the need to raise capital to meet credit growth in the second half of the year. 

• Increased Bond Maturity Pressure in Real Estate: The pressure of bond maturities in the real estate sector is expected to peak in Q3/2024. 

Read the full BondXpress May report HERE! 

About FiinRatings 

FiinRatings Joint Stock Company, a member of FiinGroup and a technical collaboration partner with S&P Global Ratings, is a local licensed Credit Rating Agency in Vietnam. FiinRatings provides credit ratings and related services to issuers, creditors and investors in Vietnam credit market. FiinRatings is also Vietnam first green bonds approved verifier, in accordance with the green bond international standard by the Climate Bonds Initiative. For more information, please visit https://fiinratings.vn/ .

FiinGroup is Vietnam’s leading provider of financial data analytics platforms, business intelligence and industry research service to local and foreign investors in capital market and corporates to grow their business in Vietnam. For more information, visit https://www.fiingroup.vn. 

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