Race to buy back bonds before maturity

TP - The corporate bond market is flourishing with the volume of new issuance increasing by nearly 46%. However, businesses issuing new bonds to have a source of money to pay off old debts also has many potential risks.

Issuing new corporate bonds to pay off old debts

In the first 8 months of the year, the cumulative volume of corporate bonds bought back before maturity was VND 177,800 billion (up 45.9% over the same period in 2024). As the second half of the year progressed, the number of corporate bonds bought back increased. The volume of corporate bonds bought back in the second quarter reached VND 90,600 billion, 3.3 times the volume bought back in the first quarter, 1.6 times the same period last year. In August alone, businesses bought back VND 27,032 billion of bonds before maturity, up 70% over the same period in 2024.

In the wave of corporate bond buybacks, some newly issued enterprises used the money to pay off old debts. Typically, Ho Chi Minh City Infrastructure Investment Joint Stock Company has just successfully issued 20 million convertible bonds, earning VND2,000 billion. Of which, this enterprise used about VND1,035 billion to pay off all previously issued bonds in advance.

In the document recently published to solicit shareholders' opinions in writing, IPA Group presented to shareholders a plan to privately offer 50 million shares. The offering price is not lower than VND 20,000/share and is equal to 90% of the average closing price of 10 consecutive trading days immediately before the date the Board of Directors decides to approve the detailed issuance plan. The expected offering period is 2025-2026 (after approval by the State Securities Commission). IPA Group said that it plans to use the raised money to pay the principal and interest of bonds issued in 2024.

According to Dr. Nguyen Duc Do, Deputy Director of the Institute of Economics and Finance, real estate businesses issuing new bonds and paying off old debts is the best solution to help businesses make profits to pay off bondholders.

Real estate businesses "burdened" with maturity

The Ministry of Finance said that in the first 8 months of 2025, 66 enterprises issued individual corporate bonds with a volume of about 322,100 billion VND, an increase of 47.3% over the same period in 2024. Of which, credit institutions accounted for 70.4% of the issuance volume, real estate enterprises accounted for 20.8%; enterprises in the remaining fields accounted for 8.8% of the issuance volume. Of which, bonds with guaranteed clauses accounted for 67,100 billion VND (accounting for 20.8% of the issuance volume).

Real estate enterprises have the largest number of mature corporate bonds. Illustration photo: Nhu Y

Dr. Nguyen Duc Do assessed that the volume of corporate bond issuance tends to increase in 2025 due to the Government raising the credit limit, the capital needs of large banks, so they issue bonds to mobilize capital. It is expected that in the remaining 4 months of 2025, about 69,740 billion VND of corporate bonds will mature. Of which, real estate bonds account for the largest proportion with 29,883 billion VND, equivalent to 49%. In the period of 2026-2027, the number of corporate bonds maturing will reach 370,000 billion VND.

According to Dr. Can Van Luc, Decree 08/2023/ND-CP allows businesses and investors to negotiate and postpone bond debt with a 2-year extension period. Therefore, the volume of corporate bonds maturing will fall in the second half of 2025. Mr. Luc commented that the pressure on bonds in 2025 is not worrying because the real estate market is improving. Businesses only need a product discount of about 10% to sell their products, instead of 30-40% as in the previous period.

The Ministry of Finance said that the outstanding debt of individual corporate bonds as of August 30 was about VND1.1 trillion, equivalent to 9.8% of GDP in 2024, accounting for about 6.6% of the economy's credit balance. Of which, institutional investors hold 81.9%, individual investors hold 18.1%.

Source: https://tienphong.vn/dua-nhau-mua-lai-trai-phieu-truoc-han-post1777730.tpo