Bond market to rebound in 2nd half of 2024: KBSV
In the latter half of the year, bond issuance is expected to rise with economic momentum, real estate recovery, and easing constraints in the corporate bond market.
After a sluggish performance in the first months of the year, the bond market is expected to rebound in the second half of 2024, said experts.
The corporate bond market continued its bearish trend in February after only VNĐ1.16 trillion (US$47.2 million) worth of bonds were released, marking a significant decrease of 45.8 per cent from the previous month.
The average maturity period for these bonds was 2.87 years.
There were just three private placement issuances by three companies operating in the construction, seaport transportation and service trading sectors.
The poor performance of the corporate bond market in the first two months of the year can be attributed to various factors, primarily the reinstatement of certain provisions outlined in Decree 65.
These provisions imposed stricter regulations on corporate bond issuance and dampening market activity.
However, KBSV Securities Company believes that for the latter half of the year, the volume of bond issuance is likely to increase as the economy gains momentum, the real estate market recovers and the prevailing constraints in the corporate bond market gradually diminish.
The pressure on the market has intensified as the volume of bonds due sees a significant increase. In March, about VNĐ23.07 trillion worth of corporate bonds will mature, surging 372 per cent from the previous month.
Among these bonds, the real estate sector accounts for 63 per cent, followed by the service trading sector at 10 per cent and the construction industry at 9 per cent.
For the whole year 2024, it is expected that around VNĐ279 trillion worth of bonds will mature, with real estate corporate bonds making up the majority of over VNĐ115 trillion. It is followed by financial institutions with over VNĐ81 trillion.
These figures do not include bonds that may undergo a second round of maturity after receiving extensions. Consequently, the actual pressure on bond maturities this year is expected to be higher than the reported numbers suggest.
The value of transactions involving secondary corporate bonds and repurchasing activities continues to decline.
Nonetheless, KBSV predicts that repurchasing activities will improve in the upcoming months as business conditions show signs of improvement. The low-interest-rate environment serves as an additional incentive for companies to increase their repurchasing of bonds that were initially issued at higher interest rates. — VNS
