Vietnamese firms face Q1 debt crunch amid sluggish recovery

[HO CHI MINH CITY] Despite lower interest rates and ample liquidity, Vietnamese firms saw limited access to debt financing through bank loans and corporate bonds in the first quarter of this year, hindered by a sluggish economic recovery and tighter lending rules.

Bank credit and corporate bond issuance are the key funding sources for medium and long-term projects in Vietnam.

The country’s bank credit grew a meagre 0.26 per cent in the year to Mar 25 – significantly lower than the 1.99 per cent observed over the same period a year ago, according to the country’s statistics agency based on data provided by the State Bank of Vietnam (SBV), the central bank.

SBV reportedly attributed the moribund credit growth to seasonal factors and the weak capital absorption capacity of firms and consumers amid tough economic conditions. The regulator set a credit growth target of 15 per cent f…