Chủ đề: corporate bonds

Vietnam’s corporate bond market has grown strongly in recent times but been accompanied by risks regarding product quality. Management agencies must therefore warn investors and at the same time take drastic action to ensure the market reaches its potential to develop stably. The market now accounts for nearly 17 per cent of GDP and has become an important medium and long-term funding channel for businesses.

The corporate bond market is expected to continue to develop this year, with expansions seen in the size and diversity of products and with an increasingly complete legal framework that ensures sustainable development. Low interest rates will also work in the market’s favor.

Aside from risks such as a sharp decline in deposits and a sharp increase in bad debts, together with greater competition from fintech companies, banks also face risks relating to real estate corporate bonds. The State Bank of Vietnam has therefore issued regulations restricting banks from pouring money into the corporate bond market.

The State Bank of Vietnam (SBV) has specified cases where credit institutions are not allowed to purchase corporate bonds. Credit institutions are also not allowed to sell corporate bonds to subsidiaries of these credit institutions.

Real estate has taken the lead in the value of corporate bond issuances. As of October 15, the value of corporate bonds issued this year by the real estate group stood at more than VND148 trillion ($6.48 billion), accounting for 37 per cent of such issuances.

According to the General Statistics Office, in the first eight months of this year, 85,500 enterprises in Vietnam had ceased operations. When done well, corporate bonds would offer salvation for the country’s economy in the context of banks being overloaded and outstanding credit representing 150 per cent of GDP. Corporate bonds are a risky investment channel when not strictly controlled, however, and could endanger the entire financial system given that many businesses are in debt while facing difficulties from Covid-19.

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.

Banks and securities companies held up to VND52 trillion ($2.26 billion) out of the VND208.9 trillion ($9.1 billion) in corporate bonds issued in the first half of the year, accounting for 55.6 per cent >>> Look at the figures - 55.6 per cent of $9.1 billion is not $2.26 billion. Or are you saying that the $9.1 billion in corporate bonds is $5.6 per cent of all bonds issued? (not just corporate bonds) <<< >>> I've checked the Vietnamese article, they said "55.6 per cent of the corporate bonds issued in H1 was held by banks and securities companies" and "