The Ministry of Finance continued to make recommendations on the operation of the corporate bond market on November 14. Since 2019, this has been the 17th warning to corporate bond issuers, market participants, and individual investors.
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.
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.
The Ministry of Finance, on July 13, informed that after six months of implementing the new legal framework on corporate bonds, the volume of corporate bonds issued through private placement was above VND168.7 trillion, up 3.2 percent over the same period last year. The volume of corporate bonds issued through public offering was more than VND15.37 trillion, equivalent to 50.3 percent of bond issuance volume in 2020, accounting for 8.3 percent of total corporate bond issuance volume.
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.
The sudden surge in individual investors that had inundated the stock markets throughout last year has not waned in the first two months of 2021, with the VN-Index exhausting at a historical peak of 1,200 points. An unstoppable wave looks to continue in coming months.
According to statistics from securities companies, in the first months of this year, the corporate bond market shows signs of cooling down compared to before because changes in regulations on corporate bond issuance have been tightened.
According to the Vietnam Securities Depository (VSD), domestic investors opened 86,269 new securities accounts in January this year. Of the newly-opened accounts, 86,000 belonged to individual investors. It is the month with the highest number of new securities trading accounts ever.
The Ministry of Finance coordinated with the World Bank (WB) and the Vietnam Bond Market Association to hold a seminar to announce the annual report of the Vietnam bond market in 2019 and dialogue on solutions to develop the corporate bond market on November 9 in Ho Chi Minh City.
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.
Recently, the Vietnam Electricity (EVN) has successfully sold 16.25 million shares out of a total of 18.75 million shares of EVN Finance (EVF), or 7.5 percent stake, that it put up for auction to two individual investors.