HÀ NỘI — Việt Nam’s corporate bond market in 2025 showed clear progress towards stability, with the annual default rate plunging from a 2023 peak of 12.2 per cent to 1.3 per cent, laying the groundwork for more sustainable growth, analysts said.

In its 2025 review of Việt Nam’s corporate bond market released this week, analysts at Vietnam Investors Service Rating (VISR), an affiliate of Moody’s, said defaults fell sharply while recovery rates improved, supported by effective restructuring efforts and favourable sector conditions.

Data showed new corporate bond issuance surged by 32 per cent year on year to VNĐ624 trillion (US$23.73 billion) in 2025, driven by banks, up 35 per cent, and residential real estate, up 37 per cent, amid strong capital demand and improving investor sentiment. This lifted total market size to about VNĐ1.4 quadrillion, equivalent to roughly 11 per cent of GDP.

According to the analysts, issuers’ credit profiles also strengthened in 2025, supported by broader adoption of credit ratings under new regulations.

“We assessed 50 per cent of new issuers in 2025 had average or higher credit ratings, up from 38 per cent in 2024,” the analysts said, adding that credit rating adoption surged, with 75 issuers obtaining their first rating, up 50 per cent year on year, mostly in the fourth quarter. This was driven by mandatory ratings for non-bank public bonds and anticipated requirements for private bonds sold to individual investors, regardless of issuance size.

Liquidity in the secondary market improved, with trading concentrated in shorter maturities and yields edging higher alongside rising interest rates.

Looking ahead, the analysts forecast issuance will gain further momentum in 2026, supported by strong private sector funding needs and improving investor confidence.

Analysts at FiinRatings also described the 2026 outlook for Việt Nam’s corporate bond market as very positive and active, with an improving credit quality, despite ongoing risks linked to rising funding costs, wide credit differentiation across corporate segments and issuers’ ability to adapt to new market standards.

“In 2026, Việt Nam’s corporate bond market will continue to strengthen its role as an important medium- and long-term funding channel for the corporate sector. However, market growth prospects are expected to be increasingly linked to issuers’ ability to meet higher credit standards and transparency requirements, rather than relying purely on scale expansion as seen in previous periods,” FiinRatings’ analysts said.

Corporate bond supply is projected to rise in 2026, largely due to tighter bank credit conditions and an upward trend in bank lending interest rates, which are expected to push corporates to diversify funding sources. Nevertheless, FiinRatings noted that market access is likely to become more polarised by credit quality and credit ratings, with issuers carrying high financial leverage, weak cash flows or limited transparency facing greater challenges.

From a market quality perspective, FiinRatings expects the average credit quality of newly issued corporate bonds to improve, supported by key regulatory changes. These include the introduction of financial leverage thresholds, with liabilities-to-equity ratios capped below five times under the amended Enterprise Law, the expansion of mandatory credit rating requirements for bonds sold to individual investors except for bank-issued bonds, tighter supervision of fund utilisation purposes and enhanced disclosure obligations. Together, these measures are expected to strengthen market discipline and reduce systemic credit risks.

On the demand side, FiinRatings sees the development of the institutional investor base as a crucial factor supporting medium-term market stability. New investment fund models introduced under Ministry of Finance Decision No.3168, the expansion of open-ended funds and the integration of credit ratings into asset allocation and risk management frameworks are expected to boost the market’s capacity to absorb high-quality issuances.

At the same time, clearer rules governing professional individual securities investors, improvements in market infrastructure and in particular the draft new decree on private bond placements, which includes provisions on fund utilisation and the role of credit institutions in managing collateral assets, are expected to further enhance transparency and investor protection. — BIZHUB/VNS