Corporate bonds slumped in 2014

Tuesday, Feb 10, 2015 08:00

An officer at Ha Noi Stock Exchange supervises an auction for government bonds issued by the State Treasury. In 2014, government bonds totalled more than VND248 trillion (US$11.6 billion), equivalent to 6.24 per cent of GDP. — VNA/VNS Tuan Anh

HA NOI (Biz Hub) — Viet Nam corporations issued far fewer bonds in 2014, despite the participation of many big companies.

Total value of corporate bond issues for the whole year reached about VND22.922 trillion (US$1.07 billion), a year-on-year decrease of 33.4 per cent and accounting for less than one per cent of the country's GDP, according to the Ministry of Finance's Banking and Financial Institution's data.

Meanwhile, government bond issues climbed 37 per cent over 2013, totalling more than VND248 trillion ($11.6 billion) last year, equivalent to 6.24 per cent of GDP.

Outstanding corporate bonds were a mere 2.5 per cent of GDP while the number of government bonds was 12.84 per cent.

Many large companies issued big bond issues, such as Vietnam National Coal Mineral Industries Group (Vinacomin), VND3 trillion ($140.2 million); Hoang Anh Gia Lai Co (HAG) and Masan Group (MSN), each issuing bonds worth over VND2 trillion ($93.5 million), Bank for Investment and Development of Vietnam (BIDV), Kinh Bac City Development Shares Holding Corp (KBC) and HCM City Infrastructure Investment Co (CII), with issues between VND1-1.5 trillion ($46.7-70.1 million) on each issue.

Apart from them, many listed companies also issued bonds with smaller sizes from VND50-350 billion ($2.3-16.4 million), including Vietnam Electricity Construction Co (VNE), Bac Lieu Fisheries Co (BLF), Ninh Van Bay Travel Real Estate Co (NVT), Hung Vuong Corp (HVG), NBB Investment Corp (NBB), DIC Investment and Trading Co (DIC).

Some planned to make bond offers last year, but have yet to issue, including construction company Tasco Co (HUT) and Transimex-SaiGon Corp (TMS) with an issue value of VND100 billion ($4.7 million) each.

Most of these convertible bond issues were private placements to banks and strategic investors with an attractive prices and interest rates. The popular bond terms were often three to five years.

According to analysts at VPBank Securities Co, the slow development of the Vietnamese corporate bond market could be attributed to the underdeveloped secondary bond market and the lack of information from issuers.

In addition, Viet Nam does not have recognised independent rating agencies to help investors evaluate the creditworthiness of bond issuers. Other countries in the region, such as Malaysia, Indonesia and Thailand, all have at least one rating company.

However, many analysts believe there are many rooms for the corporate bond market to develop in the future as issuing bonds are still an attractive way for companies to raise capital. — VNS

Comments (0)