Corporate bond market robust in recent months

Thursday, Nov 23, 2023 11:13

About 70 enterprises issued bonds worth VNĐ180.4 trillion in the first ten months of this year. — VNA/VNS Photo

The corporate bond market has recovered significantly in recent months after the shocks caused by violations in issuance of several real estate developers.

Nguyễn Hoàng Dương, deputy director of the Banking and Financial Institutions Department under the Ministry of Finance, said that the market started to see positive signs from the second quarter of this year with increases in bond issuance volume.

Statistics showed that about 70 enterprises issued bonds worth VNĐ180.4 trillion (US$7.6 billion) in the first ten months of this year and bought VNĐ190.7 trillion of bonds before maturity, an increase of 30.3 per cent over the same period last year.

In October alone, the private bond issuance value totalled VNĐ41 trillion, VNĐ17 trillion higher than September.

“The market is recovering thanks to the Government’s drastic policies and changes in market participants,” Dương said.

The corporate bond market has been frozen after the breakout of violations in issuance by some big real estate developers.

However, the Government took drastic measures to stabilise the macro-economy and operate fiscal and monetary policies with flexibility to support production and business, enabling enterprises to have cash flow for debt repayment.

Most importantly, market participants were more aware of their rights and obligations, which would help the market develop transparently and sustainably, he said.

Dương urged investors to study regulations, and information and financial capacity of issuers carefully and be responsible for their investment decisions.

He noted that the risk of bonds is the risk associated with the bond issuers, not to the bond distributors.

The finance ministry would continue to work with relevant ministries and agencies to ensure stability, transparency, safety and sustainability for the corporate bond market which would help attract medium- and long-term capital for investment and development, he said.

The ministry would closely watch the market developments and ask enterprises to arrange resources for payment following the established regulations. Enterprises, in case of facing difficulties in repayment, must negotiate with investors on solutions for bond restructuring.

Besides, inspection would be enhanced to improve quality of bond issuance and services to consolidate investors’ confidence.

Vietnam has three credit rating agencies

The Ministry of Finance has recently granted credit rating permission to one more enterprise, bringing the total number of credit rating agencies in Việt Nam to three, namely FiinRatings, Saigon Ratings and VIS Rating.

The Hà Nội Stock Exchange (HNX) said thanks to credit rating agencies, businesses will publicly disclose information about their financial status and their ability to fulfil debt obligations on time.

Next year, the State Securities Commission (SSC) will continue to direct relevant units to review and fine-tune legal regulations, enhance management and supervision, and strictly deal with any violations to support the sustainable development of the bond market.

The SSC assigned the HNX to continue working with relevant authorities to monitor the reporting obligations and disclosure of information by issuers in the corporate bond market in line with regulations.

The HNX was also tasked with organising and operating the bond market in line with domestic regulations and international practices, thus improving liquidity and market organisation.

There were 451 corporate bond codes from 114 issuers registering for private placements at HNX.

The registered trading volume was over 648.4 million bonds, equivalent to nearly VNĐ336.8 trillion. After more than three months of operation, the total trading volume of privately placed corporate bonds reached nearly 179.6 million, valued at over VNĐ49.4 trillion. The average liquidity hit VNĐ677 billion per session.

Of note, Vietnam Electricity (EVN) and the Bank for Investment and Development of Vietnam (BIDV) successfully issued green corporate bonds in accordance with International Capital Market Association (ICMA) standards. — VNS

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