In 2023, the issuance of corporate bonds shows moderate optimism but primarily dominated by the banking sector. (Photo: VNA) No corporate bond issuances havebeen reported as of January 24, according to data from the Hanoi Stock Exchange(HNX) and the State Securities Commission (SSC). However, there has beenconsistent activity in the repurchase of bonds before maturity, with companiesbuying back nearly 4.3 trillion VND (17.5 million USD) worth of bonds.
Currently, few companies aredisclosing their plans to issue corporate bonds in 2024, except for some bankssuch as Vietcombank and VietCapital Bank.
Experts predict that thecorporate bond market this year will follow a similar pattern to the previousyear, characterised by a slow start in the first half and stronger growth inthe second half.
Business operations continue to face challenges, the real estate market remainssubdued and investor confidence has yet to fully recover. These factors contributeto the trend of the corporate bond market.
Furthermore, the reintroduction of Decree 65/2022/NĐ-CP from the beginning of2024, after a period of suspension and postponement under Decree 08/2023/ND-CP,is also an obstacle for the market.
In the long term, the implementation of Decree 65 would contribute to a moretransparent and professional corporate bond market, Can Van Luc, a member ofthe National Financial and Monetary Policy Advisory Council, told baodautu.vn. However, inthe short term, this would create certain pressures for issuing companies.
Currently, bank savings interest rates are very low, and many retail investorsare interested in returning to the corporate bond investment channel but facingdifficulties in meeting the requirements of Decree 65.
According to the decree, retail investors who want to participate in thecorporate bond market must hold a securities portfolio with a minimum marketvalue of 2 billion VND, determined based on the average market value of theportfolio over the previous 180 consecutive days before being recognised as aprofessional securities investor.
Previously, retail investors were the primary growth driver of thecorporate bond market, accounting for one-third of the market's purchasingpower. However, a decrease in confidence following the Tan Hoang Minh incidentand stricter regulations on professional retail investors have led to asignificant decline in the number of retail investors participating in thecorporate bond market.
Last year, retail investors onlyrepresented around 6.8% of the total value of corporate bond transactions.
Nguyen Ba Khuong, an analyst atVNDirect Securities Corporation, said that the tighter regulations imposed byDecree 65 would impact the private placement of corporate bonds in 2024.
It might take until the end of this year for the release activity to recover asmarket participants gradually become accustomed to the new regulations.Additionally, the capital needs of businesses are expected to increase asproduction and business activities rebound, further contributing to therecovery of the corporate bond market.
According to the Vietnam BondMarket Association, in 2024, the total value of maturity bonds is nearly 279trillion VND, with 41% of the bond value belonging to the real estate sectorand 20% from the banking sector. However, the burden of maturing corporatebonds is weighing heavily on businesses, while the market remains challenging.
So far, the Ministry of Finance has not provided any information regardingwhether Decree 08 issued by the Government, which amends, supplements, andsuspends the implementation of certain provisions on the issuance and tradingof private placement of bonds in the domestic market and the issuance ofcorporate bonds to the international market, will be extended or not.
Le Hoang Chau, Chairman of the HCM City Real Estate Association, has proposedthat the government extend the application of the regulations for determiningthe status of individual professional securities investors in Decree08/2023/ND-CP by an additional 12 months (until the end of 2024). This is aimedat gradually improving the corporate bond market and aligning it withinternational standards.
Meanwhile, many experts support the idea of tightening regulations for retailinvestors while also implementing measures to attract more institutionalinvestors to participate in the corporate bond market.
Nguyen Ngoc Anh, CEO of SSI Asset Management Company, believes that it is necessaryto tightly regulate the private placement of corporate bonds due to theinherent risks involved.
However, there is a need to establish a separate trading channel forinstitutional investors and investment funds to enhance market liquidity.Currently, there are limitations in place regarding mechanisms to attractdomestic investment funds to participate.
Investment funds also noted that the corporate bond market has faced its mostchallenging phase and that there are still obstacles ahead, particularly withthe real estate market remaining subdued.
In 2023, the issuance of corporate bonds showed moderate optimism but wasprimarily dominated by the banking sector. There were fewer non-financialbusinesses issuing bonds, while real estate companies primarily utilisedcorporate bonds to restructure their debts./.
It might take until the end of this year for the release activity to recover asmarket participants gradually become accustomed to the new regulations.Additionally, the capital needs of businesses are expected to increase asproduction and business activities rebound, further contributing to therecovery of the corporate bond market.
According to the Vietnam BondMarket Association, in 2024, the total value of maturity bonds is nearly 279trillion VND, with 41% of the bond value belonging to the real estate sectorand 20% from the banking sector. However, the burden of maturing corporatebonds is weighing heavily on businesses, while the market remains challenging.
So far, the Ministry of Finance has not provided any information regardingwhether Decree 08 issued by the Government, which amends, supplements, andsuspends the implementation of certain provisions on the issuance and tradingof private placement of bonds in the domestic market and the issuance ofcorporate bonds to the international market, will be extended or not.
Le Hoang Chau, Chairman of the HCM City Real Estate Association, has proposedthat the government extend the application of the regulations for determiningthe status of individual professional securities investors in Decree08/2023/ND-CP by an additional 12 months (until the end of 2024). This is aimedat gradually improving the corporate bond market and aligning it withinternational standards.
Meanwhile, many experts support the idea of tightening regulations for retailinvestors while also implementing measures to attract more institutionalinvestors to participate in the corporate bond market.
Nguyen Ngoc Anh, CEO of SSI Asset Management Company, believes that it is necessaryto tightly regulate the private placement of corporate bonds due to theinherent risks involved.
However, there is a need to establish a separate trading channel forinstitutional investors and investment funds to enhance market liquidity.Currently, there are limitations in place regarding mechanisms to attractdomestic investment funds to participate.
Investment funds also noted that the corporate bond market has faced its mostchallenging phase and that there are still obstacles ahead, particularly withthe real estate market remaining subdued.
In 2023, the issuance of corporate bonds showed moderate optimism but wasprimarily dominated by the banking sector. There were fewer non-financialbusinesses issuing bonds, while real estate companies primarily utilisedcorporate bonds to restructure their debts./.
VNA
