The trading platform for privately placed cooperate bonds (PPBs) will make medium- and long-term finance more accessible to businesses and lessen their reliance on bank credits.

That was the message from Minister of Finance Hồ Đức Phớc speaking at the inauguration ceremony of the PPB trading platform yesterday. The event was also attended by Deputy Prime Minister Lê Minh Khái.

Phớc said the corporate bond market in Việt Nam reached 12.6 per cent of the country's GDP in 2022. The figure was less than in Malaysia (65 per cent) and Thailand (25 per cent), indicating ample room for improvement.

The launch of the trading platform would give fresh impetus to the market by improving its liquidity, lessening financial risks for investors, and providing companies with better access to capital.

However, it is only a starting point for building a fully-fledged market that is attractive to global investors. There is still a lot of work to do to get there, the minister stressed.

"High on the to-do list are legal and administrative reforms, which would act as a catalyst for the sound operation of the corporate bond market," said Phớc.

Economist Đinh Thế Hiển said the launch of the trading platform would be a life-saver to bond issuers because they could leverage the platform to service their bonds that were coming due.

In fact, around VNĐ116.5 trillion (US$4.9 billion) of bonds would reach their maturity in 2023, of which July accounts for VNĐ19.4 trillion ($820 million).

If bond issuers implement no buy-back for the rest of the year, September would be the month with the largest volume of bonds coming due, at VNĐ32.6 trillion ($1.4 billion).

"The platform would allow companies with good financial records to mobilise more capital from the economy and lessen their dependence on bank loans," said Hiển.

A representative from VNDirect said real estate would be the sector with the largest volume of bonds coming due in Q3, accounting for 43.6 per cent of the total volume of bonds coming due in the country. Finance and banking would come next with 30 per cent.

In the first six months of 2023, VNĐ43 trillion ($1.8 billion) of PPBs were issued to the economy, down 76 per cent year-on-year. Meanwhile, around VNĐ159 trillion ($6.7 billion) of bonds, including publicly-offered bonds, would reach maturity in the second half of the year.

Nguyễn Quang Thuân, Chairman of the FiinGroup, believed that the launch of the trading platform would be a big break for the market as it would restore investors' faith in corporate bonds and lay the groundwork for bond-pricing mechanisms.

According to Hanoi Stock Exchange, investors can trade their PPBs on the platform from Monday to Friday, except on holidays. There are two sessions on a trading day: the morning session, which begins at 9:00 am and ends at 11:30 am, and the evening session, from 1:00 pm to 2:45 pm.

Initially, around 1,600 PPBs were to be traded on the platform right after its inauguration. Trading would be carried out on the ground of negotiations and payment would be made under a similar mechanism as it goes for derivatives. — VNS