In November alone, 15 out of 51 bonds due were at risk of defaulting on principal. — Photo tuoitre.vn

 

The default rate on corporate bonds is expected to rise to 30 per cent in December, surpassing the 20 per cent mark seen in the first 11 months of the year, according to a report by VIS Rating. 

 

Among these, the residential real estate sector holds the largest share in terms of defaulted bond value, posing significant challenges for the financial market.

 

VIS Rating indicates that the cumulative default rate on corporate bonds by the end of November stands at 15.3 per cent, with the energy sector having the highest default rate at 44 per cent.

 

In terms of value, the residential real estate sector holds 60 per cent of the total defaulted bond volume, reflecting substantial risks in this sector.

 

In November alone, 15 out of 51 bonds due were at risk of defaulting on principal, a figure projected to rise to 30 per cent in December. This alarming rate significantly exceeds the 20 per cent default rate for the first 11 months of the year.

 

The report also estimates that around VNĐ105 trillion worth of real estate bonds will mature in the next 12 months, representing 45 per cent of the total value of maturing bonds. Among these, approximately VNĐ21 trillion is forecasted to be at risk of defaulting on principal.

 

Last month, a new defaulted bond from Crystal Bay JSC with a face value of VNĐ421 billion was recorded. The company failed to repay the principal on November 5 and its creditor, VNDirect Securities Corporation, extended the deadline to November 30. However, as of now, no repayment announcement has been made.

 

Crystal Bay's bonds are secured by 78.2 million shares of the company itself, yet these shares are not listed, resulting in very low liquidity.

 

According to VIS Rating, the company is facing serious difficulties with negative operating cash flows, high financial leverage, and limited cash reserves. By mid-2024, Crystal Bay had reported losses of VNĐ76 billion, indicating high risks of future defaults.

 

Efforts in managing defaulted bonds

 

Nevertheless, November also witnessed some positive developments in recovering overdue principal on defaulted bonds.

 

Issuing organisations have repaid a total of over VNĐ1.14 trillion to creditors, with companies like Yang Trung Wind Power, Cát Liên Hoa Real Estate Development Co., Mai Viên Real Estate and Neo Floor fully repaying the principal on some bonds.

 

The energy sector, which had high default rates on bond interests in 2022 and 2023, accounted for 80 per cent of the total recovered debts in the month. The recovery rate for defaulted bonds in this sector increased to 17.7 per cent, indicating significant improvements.

 

In November, the issuance of new bonds reached only VNĐ23.4 trillion, a sharp decrease from the VNĐ39.1 trillion in October 2024. However, over the cumulative 11 months, the issuance of new TPDN bonds exceeded VNĐ400 trillion, a substantial increase compared to the same period last year.

 

Commercial banks still dominated the majority of new issuances, totalling VNĐ17.4 trillion in November. Notably, 40 per cent of the bonds issued by banks qualified as Tier 2 capital, including major banks like HDBank, Asia Commercial Joint Stock Bank (ACB), TPBank, LPBank and Eximbank.

 

Furthermore, the market also observed a rise in the number of bonds issued to the public, with a 30 per cent increase compared to 2023, reaching VNĐ46 trillion. This accounts for 10.2 per cent of the total new issuances, indicating a trend of shifting from private placements to public offerings. — VNS

 

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