Experts said it is vital to regain investors’ confidence to stabilise the corporate bond market (Photo: VNA) The bond market is expected to become a main source of funding forcompanies in the long term, easing the pressure on banks.
But an array of scandals involving issuances by propertydevelopers such as Tan Hoang Minh, Van Thinh Phat and VKC Holdings has erodedinvestors’ faith.
Meanwhile, authorities continue to investigate and punish propertyand bond frauds.
Nguyen Tu Anh, director of the general economic affairs departmentunder the Party Central Committee’s Economic Commission, said the market hasample room for improvement.
It is a flexible capital channel that allows enterprises to raisefunds without causing any dilution in ownership, he pointed out.
Between 2017 and 2021, the bond market grew at 46% annually,indicating the huge demand, he added.
Nguyen The Minh, director of analysis at Yuanta Securities, saidthere are three main channels for enterprises for mobilising capital: bonds,equity and loans.
“So far this year all these have been tied up.”
Le Xuan Nghia, a member of the National Financial and MonetaryPolicy Advisory Council, said the bond market would continue to face hurdlesbecause of the lack of investors’ confidence.
Le Hoang Chau, Chairman of the Ho Chi Minh City Real EstateAssociation, said many real estate companies are also struggling with lack of liquidityand might have to make painful decisions to survive.
Many property developers are scaling down their business as can beseen by investment and construction delays, he said.
They have stopped embarking on new projects, issuing bonds andmaking IPOs, he added.
Huge pressure
A huge amount of maturing corporate bonds due for payment from nowthrough 2024 is putting great pressure on issuers, who are mostly propertybusinesses.
According to a report by credit rating agency FiinGroup, the 20biggest bond issuers are facing liquidity problems since they cannot issueafresh but have to redeem maturing bonds.
The companies are all under great liquidity pressure over the next12 months due to weak cash flows amid high interest rates, it said.
More than 35 trillion VND worth of bonds issued by propertycompanies, mainly unlisted, will mature in 2022 and over 61 trillion VND in2023.
Recommendations
Expert Le Duy Binh said it is vital to provide sufficient andtransparent information to restore investors’ confidence.
Binh said it is necessary for the Government to intervene andresolve the difficulties faced by the corporate bond market, warning thebanking system would otherwise be affected.
Bui Van Huy, director of DSC Securities Corporation’s HCM Citybranch, said investors should carefully evaluate the type of bonds they areholding before making a decision to redeem them prematurely.
The Government should allow commercial banks to participate in thepurchase of bonds before maturity and treat them as a special form of credit,he said.
He also proposed offering preferential credit to key manufacturingindustries and fields to help them tide over the current difficulties.
At an urgent meeting with securities companies and bond issuers,Minister of Finance Ho Duc Phoc ordered the bond issuers to consider sellingassets to pay off their debts to investors.
“Bond issuers must maintain their credibility with investorswhatever it takes.”
Deputy Minister of Finance Nguyen Duc Chi warned that bond issuersfound committing wrongdoing would be severely penalised, stressing that thelegitimate interests of investors would be protected under all circumstances.
Speaking at a recent meeting, PM Pham Minh Chinh stressed theGovernment’s determination to reform the bond, real estate and securitiesmarkets.
He also promised severe penalties for violations and assured thatthe rights and interests of people and businesses would be protected.
The Government has already set up three working teams forliquidity and currency, the property market and corporate bonds to carry outreforms./.
VNA
