Businesses have been demanding capital investment increasingly whereas capital stagnant in the State treasury will make commercial banks difficult drop their benchmark interest rates.
The value of bonds bought back by businesses before maturity since the beginning of the year increased 70.6 percent year on year with a total value of VND76,523 billion (US$3,293,043).
The corporate bond market experienced a prolonged period of stagnation, but in the first few months of 2023, it has seen a resurgence with numerous successful issuances.
Prime Minister Pham Minh Chinh chaired a national online conference in Hanoi on February 17 that sought ways to remove obstacles to the domestic real estate market and give it a push to grow safely, healthily and sustainably.
Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank), on December 16, said that to supplement the medium and long-term mobilized capital to meet the borrowing needs of customers, it offered to sell VND1.95 trillion of bonds to the public.
Minister of Finance Ho Duc Phoc has just signed Directive No.01/CT-BTC on strengthening supervision and rectifying problems related to issuance, investment, and service provision activities in the corporate bond market.
Authorities should quickly handle violated enterprises to fortify investors’ confidence. In addition, it is necessary to soon complete the legal corridor for the corporate bond market to develop sustainably, said experts.
Besides continuously giving risk warnings to investors about buying corporate bonds in the market, authorities have also issued many regulations to restrict the issuance of corporate bonds. However, in reality, many investors still purchase corporate bonds, despite potential risks.
Regarding the incident in which nine private bond offerings of the group of companies under Tan Hoang Minh Group were canceled by the State Securities Commission (SSC), some related banks and securities companies have simultaneously informed about it.
The Investigation Police Agency under the Ministry of Public Security, on April 5, prosecuted and detained Do Anh Dung, Chairman of Tan Hoang Minh Group, to investigate the act of fraudulent appropriation of property.
The State Securities Commission (SSC), on April 4, informed that it had canceled bond issuances of Viet Star Company, Winter Palace Company, and Soleil Company under Tan Hoang Minh Group due to acts of disclosing false information and concealing information when issuing private bonds.
In the first two quarters of 2021, real estate companies are the winners of corporate bond issuance, with an issuance value of up to VND92.3 billion and an average interest rate of 10.36 percent per annum. In the context that interest rates on bank deposits stand at an extremely low level, corporate bonds remain attractive, especially for individual investors. On the other hand, many investors have been circumventing regulations over the past time.
Recently, the conditions for corporate bond issuance to the public have been tightened by the State. This is a move to reduce risks for investors, especially for individual investors, so the number of issued corporate bonds has also fallen sharply. However, in the context that deposit interest rates remain at a low level, many enterprises have issued corporate bonds with high-interest rates to attract capital.
Although Vietnam's corporate bond market is the smallest among the six corporate bond markets in the ASEAN, it has recently developed extremely rapidly.
Amid the context that banks limit medium and long-term loans, many enterprises have shifted to a new capital mobilization channel – corporate bond issuance. Statistics by the Ministry of Finance showed that in the first four months of this year, the corporate bond market developed rapidly, exceeding VND58 trillion.
While stocks of many enterprises and even banks have dropped to below face values, the bond market has warmed up as enterprises raced to mobilize capital through bond issuance, especially small enterprises.
In January alone, the total corporate bond issuance exceeded VND13.37 trillion, of which real estate enterprises issued more than VND7.36 trillion, accounting for 55 percent of the total issuance in the market.
The State Bank of Vietnam (SBV) continues to stick with the plan of reducing the proportion of short-term capital used for medium and long-term loans this year, which is considered to be a barrier to the credit of real estate. However, according to the leader of the central bank, this does not mean that it will close the doors and not give loans to this sector but it will only provide capital for effective real estate projects.
In the first eight months of this year, it is estimated that the total amount of corporate bonds being offered was more than VND129 trillion and successful issuance rate was 90.8 percent, or nearly VND118 trillion. Of which, banks issued more than VND56 trillion worth of bonds, accounting for nearly half of total value of issued bonds in the market.
