June 2025 Bond Spotlight: Bond Issuance By Commercial Banks Surges To Meet High Credit Growth Demand

FiinRatings – a Strategic Partner of S&P Global – is pleased to release the June 2025 edition of the “Bond Market Spotlight” report, providing in-depth analysis of market developments and key issuance trends in the first half of the year. Notably, bank bonds continued to dominate the market with a significant increase in share, reflecting rising demand for Tier 2 capital amidst robust credit growth and persistently low interest rates.

FiinRatings – a Strategic Partner of S&P Global – is pleased to release the June 2025 edition of the “Bond Market Spotlight” report, providing in-depth analysis of market developments and key issuance trends in the first half of the year. Notably, bank bonds continued to dominate the market with a significant increase in share, reflecting rising demand for Tier 2 capital amidst robust credit growth and persistently low interest rates.

Key Takeaways:

Macroeconomics Impact Factors:

• Strong credit growth and a widening gap with deposit growth have kept bond issuance activities by commercial banks increasingly active. Credit growth reached 9.9% in the first half of the year, and the strong momentum compared to slower deposit growth has increased demand for Tier 2 capital from commercial banks to meet capital adequacy ratios. At the same time, the corporate bond market also benefits from low interest rates.
• Capital raising through international debt or bond issuance remains challenging for Vietnamese enterprises, as the Fed Fund Rate remains high and the VND/USD exchange rate continues to rise despite the overall downward adjustment trend of the USD.

New Legal Regulations:

• New issuance requirements for private placements are expected to enhance bond quality: The Amended Law on Enterprises (2025), effective from July 1, 2025, stipulates that the Debt-to-Equity ratio (including the value of the proposed bond issuance) must not exceed 5 times for enterprises seeking to issue bonds through private placement. This new legal requirement will restrict bond issuance by enterprises or project companies with excessively high financial leverage.
• This new regulation may also prompt certain issuers to shift toward public offerings.

Primary Market Activities:

• Regarding issuance scale: June continued to see strong growth, reaching VND 105.5 trillion (+52.4% MoM), all of which were private placements. In the first six months of the year, total market issuance value reached VND 248.6 trillion (+71.2% YoY), with 76.3% of the issuance coming from credit institutions. At this pace, the total amount raised through corporate bonds this year is expected to exceed VND 500 trillion - just behind the peak of 2021, when over VND 700 trillion was raised through this channel.
• Regarding issuance structure: Bank bonds accounted for the majority, representing 76.3% of total issuance in the first half of 2025, equivalent to VND 189.7 trillion. In the context of high credit growth, commercial banks were compelled to accelerate Tier 2 capital issuance through this bond channel. This is largely due to the slowdown in deposit growth, resulting from the policy of maintaining low deposit rates, while banks are still required to comply with the Loan-to-Deposit Ratio (LDR) and the ratio of short-term capital used for medium- and long-term loans. The remaining 23.7% of capital raised, equivalent to approximately VND 58.9 trillion, was largely attributed to real estate bonds, which accounted for approximately 67.3%, or around VND 39.6 trillion. This is understandable given that legal bottlenecks for a number of projects have recently been resolved, making it more feasible to access credit and raise capital via the corporate bond channel. This is considered a positive signal for the real estate sector, helping to manage the non-performing loan risks of commercial banks.
• Regarding issuance method: The volume of corporate bonds issued via public offerings recorded a notable increase, totaling VND 27.9 trillion, equivalent to more than 76.8% of the total public issuance value in 2024. However, only commercial banks and two securities companies opted for this public offering channel.
• Regarding coupon rate: The coupon rate saw a notable decline from an average of 7.43% to 6.69% (average across all tenors and bond types). 64% of the bonds were issued with a fixed interest mechanism, 22% with a floating rate (linked to the 12-month average deposit rate of the four state-owned banks), and the remainder with a mixed interest mechanism.
• Regarding repurchase activity: Repurchase activity remained active, mainly from credit institutions and real estate enterprises (1.2x higher than the previous month), bringing total buybacks in the first 6 months up by 42.7% compared to the same period in 2024. The value of bonds maturing in the second half of the year is estimated at VND 125.0 trillion, placing pressure on the issuers’ ability to fulfill financial obligations.

Secondary Market Activities:

• Regarding liquidity: Secondary market transactions in June 2025 reached nearly VND 137.1 trillion across both private placements and public offerings. The average daily transaction value rose by 13.4% compared to the previous month, standing at VND 6.53 trillion/day. Banking and real estate sectors continued to dominate with nearly 71% of the market’s total transaction value. In the first half of 2025, liquidity recovered strongly, while bank sector trading remained relatively unchanged YoY, the real estate sector surged by 37.6%.
• Regarding Yield to Maturity (YTM): YTM rates generally stayed within a stable range compared to nominal rates. However, some bond transactions involving companies facing financial distress and prolonged default showed extraordinarily high yields ranging from 30-40%, 50-70%, 185%, and even as high as 519% for bonds with only six months to maturity.
• Regarding default risk: In June, an additional VND 4.5 trillion of problematic corporate bonds was recorded, bringing the total for H1 2025 to VND 23 trillion (-31.0% YoY). Of this amount, 45.8% came from the real estate sector, 16.4% from manufacturing, 8.7% from construction, and the remaining 28.6% from other sectors.

Green Finance Spotlight:

• Vietnam’s bond market has witnessed impressive growth, reaching USD 140 billion in 2025. However, green bonds only account for less than 1%. To unlock the full potential of this market and enable cost-effective, sustainable capital mobilization for projects aimed at mitigating climate change, Vietnam must implement multi-layered solutions with diversified instruments, concretized and transparent policies, and effective incentives to attract investors.
• On July 4, 2025, the Prime Minister signed the Decision No. 21/2025/QĐ-TTg on “Regulations on environmental criteria and verification of investment projects under the green taxonomy,” after a long wait. We believe this new regulation will pave the way for a new wave of sustainable investment in Vietnam, including green credit and green bonds. A detailed Commentary Report on the impact of this regulation is available (see here).

For further information or tailored consultation regarding the report or our related services, please contact us:

• 𝐄𝐦𝐚𝐢𝐥: support.fiinratings@fiingroup.vn
• 𝐓𝐞𝐥: (84-24) 3562 6962

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