Vietnam’s corporate bond market rebounded sharply in the second quarter of 2026, with private placements surging nearly ninefold from the previous quarter to more than VND214 trillion ($8.14 billion). However, a wave of upcoming maturities and elevated interest rates continue to pose risks, particularly for highly leveraged property developers.
More than 214 trillion dong flowed into Vietnam’s corporate bond market in second quarter. Photo illustration by NDT
Property firms overtake banks as top bond issuers
After a prolonged slowdown, Vietnam’s corporate bond market staged a strong recovery in H1/2026, driven largely by a sharp pickup in issuance during Q2.
Duong Kim Anh, investment director at Vietcombank Fund Management (VCBF), said private corporate bond issuance totaled only around VND28 trillion ($1.06 billion) in Q1 before jumping to approximately VND214 trillion ($8.14 billion) in the April-June period.
The composition of issuance also shifted significantly. Commercial banks, which issued around VND175 trillion ($6.66 billion) worth of bonds during the same period last year, saw issuance decline to just over VND100 trillion ($3.8 billion) in H1/2026.
Kim Anh said rising deposit rates had pushed up funding costs, prompting many lenders to be more cautious about raising medium- and long-term capital through the bond market.
By contrast, real estate developers returned aggressively to the market. Bond issuance by the sector climbed to more than VND100 trillion ($3.8 billion) in the first six months of the year, up nearly fourfold from roughly VND30-40 trillion a year earlier.
Demand for funding to launch new projects and refinance maturing debt has been the main driver behind the increase, she said.
Public bond offerings, however, remained subdued. Total public issuance reached only about VND20 trillion ($760.6 million) during H1, with banks accounting for most of the supply, leaving investment funds with limited access to high-quality corporate bonds.
Higher yields offer opportunities but refinancing risks remain
The market’s recovery has coincided with a sharp increase in interest rates.
According to Kim Anh, deposit rates, which generally stood at 5-6% a year during the same period last year, have risen to between 7% and 9%, with joint-stock commercial banks recording increases of around 200 basis points since the end of 2025.
The rise has pushed corporate bond yields significantly higher. Long-term bank bonds now offer yields of around 8-9% per year, compared with 5-6% a year ago.
Meanwhile, real estate developers and many non-banking companies are offering yields of 10-12% to attract investors.
Secondary market trading remains concentrated in real estate bonds, while bonds issued by manufacturing companies continue to see relatively limited activity, Kim Anh said.
She warned that the biggest challenge for the market is likely to emerge in H2.
Although the proportion of issuers missing bond payments declined in Q1, the improvement was largely due to a relatively light maturity schedule rather than a fundamental strengthening in corporate credit quality, she said.
VCBF estimates that between VND80 trillion and VND100 trillion ($3.8 billion) of principal and interest payments will mature each quarter for the remainder of 2026.
The refinancing burden is expected to weigh most heavily on non-financial companies, particularly highly leveraged property developers.
“With interest rates remaining elevated and funding conditions still challenging, many companies are likely to continue facing liquidity pressure in the coming months,” Kim Anh said.
Looking ahead, she expects little room for interest rate cuts during the rest of 2026.
A recovery in credit demand, coupled with continued public investment disbursement, is likely to keep borrowing costs elevated, suggesting interest rates will remain near current levels through year-end.
For bond funds, however, the higher-rate environment presents opportunities to improve medium- and long-term returns.
To prepare for potential market volatility, VCBF has increased the share of highly liquid bank deposits and certificates of deposit to around 30% of its portfolio, up from 15-20% previously, to better meet potential investor redemptions.
Kim Anh noted that bond fund performance typically lags changes in market rates because coupon rates on most bonds are reset every six months. As a result, returns are expected to improve gradually rather than immediately, unlike bank deposit rates.
VCBF aims to continue generating returns about 1.5 to 2 percentage points above bank deposit rates and advises investors to remain patient as a new interest rate cycle takes shape.