HCMC – Commercial banks have reduced their holdings of corporate bonds amid a bleak bond market outlook and credit crunch.

Techcombank, one of the biggest holders of corporate bonds, has cut its holdings by 12% over the previous quarter to VND43,500 billion, a steep fall of 43.3% compared to VND76,800 billion it held the first quarter.

TPBank said in its latest financial statement that its corporate bond holdings had dropped steadily from nearly VND27,600 billion in the first quarter to some VND23,200 billion in the second quarter before ending up at VND22,300 billion by the end of the third quarter, dipping 19% compared to early this year.

HDBank’s total outstanding corporate bonds stood at VND5,400 billion in late September, accounting for just over 1% of its total assets, plunging 46.6% against early this year.

Banks cut their holdings of corporate bonds to make room for lending as the credit demand surges at the end of the year when enterprises step up production in preparation for the Lunar New Year buying spree.

Besides, the bond market has become bearish since the arrests of property tycoon Truong My Lan, the chairwoman of HCMC-based developer Van Thinh Phat Holdings Group, and Tan Hoang Minh Group’s leaders over suspected bond-market fraud.

The outstanding value of corporate bonds by the end of September was VND1,300 trillion, equivalent to 13% of 2021’s GDP, FiinRatings said in its report on the bond market outlook. Of the total, some VND908,800 billion worth of bonds were issued by non-banking companies, including real estate bonds worth VND455 trillion.