BONDXPRESS OCTOBER: CORPORATE BOND MARKET OUTLOOK AMID NEW LEGAL REGULATIONS

The issuance and buyback activities of non-financial enterprises remained subdued in September. However, factors such as the credit growth outlook and exchange rate movements will create opportunities for the recovery of non-bank corporate bonds in the final months of the year. Additionally, regulatory amendments are expected to bring both challenges and opportunities to the corporate bond market in the coming time.

The issuance and buyback activities of non-financial enterprises remained subdued in September. However, factors such as the credit growth outlook and exchange rate movements will create opportunities for the recovery of non-bank corporate bonds in the final months of the year. Additionally, regulatory amendments are expected to bring both challenges and opportunities to the corporate bond market in the coming time. 

Below are some key highlights from the October BondXpress Report by FiinRatings: 

• Favorable credit growth and exchange rates: The exchange rate showed positive movement after the Fed announced its first interest rate cut in four years. A lower exchange rate will create favorable conditions for Vietnamese businesses to access foreign loans and issue international bonds in the near future. In addition, credit growth is also on a recovery trend, mainly driven by the corporate segment, although the credit quality needs to be monitored to avoid increasing risks to the banking system. 

• Corporate bond issuance declined: In September 2024, the value of C-bonds issuance dropped by 27.5% compared to the previous month. However, since the beginning of the year, the total value still increased by 57.9%, mainly contributed by credit institutions, which accounted for 74% of the total issuance value. 

• High delayed payment rates but slowing down compared to 2023: The delayed payment rate for C-bonds reached 18.9% in the first nine months of 2024, but the growth rate has slowed compared to 2023 thanks to the improved macroeconomic conditions. 

• Active secondary market: Secondary C-bond trading value in September 2024 increased by 43% compared to the previous month, with the banking and real estate sectors accounting for the largest share, increasing by 25.3% and 40.0%, respectively. 

• Impact of the Draft Revised Securities Law: FiinRatings assesses that tightening the participation of individual investors in the privately placed C-bond market (except those issued by credit institutions) is a reasonable approach, given the high risk level of this product. However, to avoid a capital flow bottleneck, it is necessary to promptly review the investment restrictions on C-bonds for institutional investors (insurance companies, investment funds, etc.). Additionally, promoting bond credit ratings will help these institutional investors allocate assets according to risk levels. 

For the full BondXpress October report by FiinRatings, please refer to THIS LINK.   

About FiinRatings   

FiinRatings, a member of FiinGroup and a technical cooperation partner of S&P Global Ratings, is a licensed credit rating agency in Vietnam. FiinRatings provides credit ratings and related services to issuers, credit institutions, and investors in the Vietnamese credit market. FiinRatings is also the first authorized green bond verifier in Vietnam, adhering to the international green bond standards of the Climate Bonds Initiative... For more information, please visit https://fiinratings.vn/     

FiinGroup is Vietnam's leading provider of financial data analytics platforms, business information services, and industry research. FiinGroup provides services to domestic and foreign investors in the capital market and businesses to support their business development in Vietnam. For more information, please visit https://www.fiingroup.vn 

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