The outstanding value of Việt Nam's corporate bond market is currently equivalent to more than 15 per cent of the GDP. — VNA/VNS Photo
Following the recent launch of the privately-placed corporate bond trading system, Minister of Finance Hồ Đức Phớc has said if transparency and safety are ensured, privately-placed corporate bonds will effectively prove their role in mobilising capital for businesses.
He said the launch of this system reflects his ministry’s strong determination to develop the financial and stock markets. The system will help State agencies better manage the bond market while better allowing people to engage in supervision, thus improving market transparency.
On July 19 – the day the system launched – 19 privately-placed corporate bonds had their registrations approved and were offered for transaction. Four tranches of bonds with more than five million units worth over VNĐ1.78 trillion (US$74.9 million) were traded.
Phớc considered this a good sign, saying if transparency and safety are ensured, privately-placed corporate bonds will be able to bring into play their role in mobilising capital for businesses.
According to the finance ministry, the corporate bond market of Việt Nam remains relatively modest compared to others in the region. Its outstanding value is equivalent to more than 15 per cent of the GDP, and targeted at 20 per cent by 2025 and at least 25 per cent by 2030 under the financial strategy.
The minister noted the corporate bond market has developed positively over the past years. A legal framework has been basically built to facilitate its development and assist businesses in raising funding for their operation.
However, the market’s quality has yet to match its fast growth. Some risks have appeared and need precise assessment to devise appropriate solutions helping the market develop in the right direction and in a safe and sustainable manner.
Therefore, a legal framework and policies for the market are gradually taking shape through the issuance of laws, decrees, and circulars, he added.
On March 5, the Government released a decree which amended and supplemented some regulations of the previous ones on privately-placed corporate bonds. The new document aims to create a legal corridor for tackling certain short-term difficulties for businesses and, at the same time, guarantee investors’ rights and interest.
According to the Việt Nam Bond Market Association, almost no businesses issued bonds in the market in late 2022 and the first two months of 2023. However, from the time the new decree was released to mid-July, more than VNĐ68.5 trillion ($2.88 billion) worth of corporate bonds was issued, comprising nearly VNĐ9.3 trillion ($392 million) via 11 public offerings (13.5 per cent) and VNĐ59.2 trillion ($2.49 billion) via private placements (86.5 per cent).
Deputy Minister of Finance Nguyễn Đức Chi held that this was a positive sign showing the policy’s effectiveness in enhancing businesses and investors’ confidence.
Since the launch of the new decree, market stakeholders’ awareness has improved substantially while issuers and service suppliers have also complied with the rules on information provision for investors, he said, expressing his hope that the market will develop sustainably.
The Hà Nội Stock Exchange (HNX) held 30 auctions of Government bonds and government-guaranteed bonds with a total volume of 33.2 trillion ($1.4 billion) in July.
The amount of capital raised via this channel by the State Treasury came to VNĐ28.8 trillion ($1.2 billion) while the Việt Nam Bank for Social Policies (VBSP) mobilised VNĐ4.4 trillion ($185 million).
The State Treasury raised over VNĐ208.7 trillion ($8.79 billion) worth of Government bonds in the first seven months of this year, equivalent to 52.18 per cent of the plan set for 2023 while VBSP mobilised VNĐ4.45 trillion ($187 million), equal to 18.27 per cent of the year’s target.
On the secondary market, the total trading value of G-bonds during the month reached VNĐ109.6 trillion ($4.61 billion), down by 29.23 per cent from the previous month, with an average trading value of VNĐ5.2 trillion ($219 million) per session.
The total volume traded via outright transactions made up 79.7 per cent of the total.
Bonds with 15, 20 to 25, and 10-year maturities were traded the most, accounting for 21.45, 18.58 and 17.23 per cent, respectively. — VNS