Real estate firms continue to exhibit indifference towards the bond market
Hangin' tight in Hanoi - The local corporate bond market is ballooning, thanks to banks and securities firms storming the scene during March. But where are the real estate giants? These heavyweights have been strangely silent, failing to join the bond-issuance party so far in 2025.
Latest reports from MB Securities reveal a stimulating surge of activity in March, with a whopping eight new issues amounting to almost ₫17.2 trillion (roughly $661 million). That's a seven-fold increase compared to the previous month and a healthy 7.3% year-on-year rise.
Banks took the credit for this lasting revival, dominating the scene with an impressive 68% of the total issuance value.
HDBank staked a hefty ₫5 trillion with maturities ranging from 84 to 96 months, offering interest rates between 7.38% and 7.58% per annum. Meanwhile, LPBank claimed ₫3 trillion with maturities of 84 to 120 months and rates of 7.58% to 7.88%. MBBank also made a splash with an issuance of ₫2.2 trillion featuring a 72-month maturity and an interest rate of 6.18%.
Granted, banks were eager to drum up capital, as their lending muscles needed flexing in response to a roaring demand for credit. The State Bank of Vietnam reported a credit growth rate of 3.9% by the end of Q1, doubling its pace from the same period last year.
For the year until March, the corporate bond market reached an impressive ₫25.1 trillion in capital raised, just 2.7% shy of last year's Houdini-like feat. The average interest rate for corporate bonds remained stable at about 7.2%, mirroring 2024's numbers.
Public bond issuances took center stage, with 11 transactions resulting in ₫23.1 trillion in deals—a thrilling 116% increase year-on-year, with the banking sector stealing the show with ₫19.3 trillion in issuances, an astounding 377% leap from the previous year.
So, what's with the real estate sector? They've beenReluctant Roberts, shying away from the bond game like it's a high-stakes poker table.
The real estate sector is grappling with pressing challenges, such as a growing number of companies hopscotching their bond payments early, with March alone seeing nearly ₫9.6 trillion in early redemptions. Guess who enjoys the lion's share? You got it—the real estate sector counted for 11.7% of that total redemption value, pointing to some serious liquidity troubles within the industry.
While the bond market is celebrating its newfound momentum, it still grapples with chronic issues like tardy payments. In March alone, two companies admitted they couldn't meet their payment deadlines, amounting to a combined ₫516 billion.
It appears that the quandary of real estate bond issuances is clutching onto several roots, including:
- A tighter regulatory climate, as Vietnam plans to rein in the corporate bond market for safer financial leverage among companies seeking bond funding[3].
- Market risks and redemption pressure, with real estate bonds making up more than 50% of all bond maturities in 2025, signaling a massive debt burden for property developers[4].
- External economic challenges, such as trade tensions with the US that may be cramping market confidence[2].
- Strategic bond repurchases by major players like Novaland, who've opted to buy back their existing bonds, amounting to ₫7 trillion, suggesting a shift towards managing existing debt rather than expanding it[5].
There were no new bond issuances from property developers in the first quarter of 2025. - Photo vtv
- In stark contrast to the thriving banking sector, the real estate sector has been noticeably absent from the corporate bond market, choosing to remain silent and refrain from issuing bonds in 2025.
- Research by MBBank has estimated that the real estate sector accounts for a significant portion of early bond redemptions, highlighting potential liquidity issues within the industry.
- The tighter regulatory climate in Vietnam, aimed at ensuring safer financial leverage among companies, might be deterring real estate giants from entering the bond market.
- The massive debt burden faced by property developers, with real estate bonds making up more than 50% of all bond maturities in 2025, could be another reason for their reluctance to issue bonds.
- External economic challenges such as trade tensions with the US may also be affecting market confidence, potentially dissuading real estate companies from investing in the bond market.
