The value of corporate bonds maturing in 2023 is estimated at VND250 trillion, falling sharply compared to the third quarter of 2022.
The scale of debt in the corporate bond market is less than 15 per cent of GDP. Particularly, private corporate bonds make up 12.5 per cent of GDP, equivalent to VND1.19 quadrillion, which is still a modest amount compared to other countries in the region and also far from the target set by 2025.
However, with the developments of the market last year, Vietcombank Securities Company (VCBS) said that professional bond investors were unlikely to return to the market this year.
The securities firm expected the size of the market to continue to shrink this year due to Decree 65's restrictions on new issuance and restructured issuance, and high new issuance costs. In addition, the volume of bonds bought back before maturity also reduces the market's overall size.
Other reasons are the medium-term maturity pressure on the market due to large maturity volume, low possibility of new issuance and existing interest rate uptrend.
According to VCBS estimates, the volume of corporate bonds maturing in 2023 is estimated at VND250 trillion, a significant decrease compared to the third quarter of 2022 due to the proactive repurchase before maturity.
In particular, the acquisition value of the banking and real estate industries in the fourth quarter reached VND35 trillion and VND24 trillion, respectively.
However, the trend of repurchasing before maturity helps enterprises and issuers be more proactive in bond capital payment demand. The move also shows significant efforts to arrange capital, and reduce pressure on bond maturity in the near future.
Moreover, high interest rate base and low investors' confidence in the corporate bond market will make the market less appealing when considering risks and benefits.
For institutional investors, the investment demand for corporate bonds is also forecast to decrease as risk levels are expected to rise and the government bond investment channel has returned to an attractive valuation compared to many years ago, causing a fall in the competitiveness of the corporate bond channel.
In 2023, the inspection and supervision activities of issuing bonds in large quantities, without collateral, and using capital for improper purposes, will affect the offering and issuance listing and trading activities. And securities investment and stock market will still be boosted.
2023 is also the year to accelerate the restructuring activities of bonds that will be due soon.
In general, VCBS believes that the corporate bond market will continue to be in a quiet period with low liquidity. — VNS