HANOI: In the past few years, Vietnam’s corporate bond market has seen significant fluctuations, prompting concerns over the sustainability of debt levels and the overall health of the financial ecosystem.
The latest reports indicate that while the volume of bond issuances increased in 2024, the pressures associated with debt repayment continue to be an urgent issue for many companies, particularly at the start of 2025.
According to a recent report by the Vietnam Investors Service and Credit Rating Agency (VIS Rating), the corporate bond market recorded approximately 485 trillion dong in new issuances last year, up 40% year-on-year.
This surge is primarily driven by the banking sector, which accounted for 70% of the total issuances, while the real estate sector contributed 17%.
Despite this growth, 2024 saw a significant level of payment delays, with 14.5% of bonds facing late repayments.
Yet only 11 issuers were reported to have defaulted on principal or interest payments in 2024, compared to a staggering 79 in 2023.
This reduction in defaults, while encouraging, still raises concerns as we move into a new fiscal year during which an estimated 224 trillion dong in bonds will mature.
In 2025, the corporate bond landscape appears daunting.
An alarming 22% of bonds maturing in January 2025 are at risk of defaulting on principal payments, according to the report.
The real estate sector remains the most vulnerable, with residential developers particularly at risk.
Among the five trillion dong in bonds maturing this month, two bonds from this sector are flagged for potential payment delays.
Moreover, a staggering 110 trillion dong in bonds issued by real estate companies will come due in 2025, with 31 trillion dong already in arrears before the new year.
The overall debt burden is compounded by the fact that 94% of the value at risk primarily stems from the real estate and tourism sectors, highlighting an urgent need for intervention and reform.
The deterioration in credit ratings across various sectors is alarming. — Viet Nam News/ANN