To ensure Vietnam’s corporate bond market develops stably and sustainably, the Ministry of Finance and the Ministry of Construction will work together to strengthen supervision over issuance activities and limit real estate enterprises issuing bonds with high interest rates. The Ministry of Construction also suggested supplementing regulations on the financial safety ratio of real estate enterprises after granting construction and investment permits for real estate projects.
Capital demand for green growth is quite large and long-term, so the burden of provision should not be put solely on the shoulders of the banking sector. According to Deputy Governor of the State Bank of Vietnam Pham Thanh Ha, “In the 2021-2030 period, to realize green growth, the government will focus on promoting resources from commercial loans and private investment such as green credit and green corporate bonds.”
Decree No. 65 on the private placement of bonds, issued by the government on September 16, has many new features and strict regulations on both issuers and investors. It has been supplemented with regulations stating that issuers are required to have credit ratings in certain cases, improving the obligation of issuers to disclose information to investors, and improving the professionalism of investors.
Bond issuances by real estate enterprises have been declining in recent times. According to the Vietnam Bond Market Association (VBMA), there were only eight individual corporate bond issuances in August, and only one was by a real estate company. One real estate enterprise issued bonds in July.
Vietnam’s corporate bond market has seen positive changes from a series of corrective measures by management units. Bonds have been issued again since May, while the volume issued in June was 55 per cent higher than in April.
The government bond and corporate bond segments are both growing rapidly and had boosted Vietnam’s local currency bond market to $91.5 billion by the end of December. Annual growth is up to 25.5 per cent, according to the Asian Development Bank (ADB).
More than VND23 trillion ($1.02 billion) was mobilized through the government bond channel in January. The State Treasury plans to issue VND105 trillion ($4.64 billion) worth in the first quarter of 2022. The MBS Securities Company believes that government bonds remain the first choice for those seeking liquid assets with fixed profitability, so even though yields are low, market absorption is still good.
The proportion of individual investors buying corporate bonds has fallen sharply in recent years. Some still do so, however, if only because of the more attractive interest rates compared with bank deposits. The corporate bond market is forecast to continue growing in the time to come.
The lack of easy access to cheap bank credit has pushed up demand for capital mobilization via corporate bond issuances. Because corporate bond interest rates are still quite high compared to bank deposit rates, the bond market is forecast to continue to grow strongly in the second half of 2021.
