At a conference on developing a safe, transparent, and efficient capital market on April 22, Nguyen Thi Hong, Governor of the State Bank of Vietnam, said that credit institutions are both direct investors in and major issuers of the corporate bond market.

41 banks buy corporate bonds worth $11.9 billion

The number of credit institutions buying corporate bonds increased to 41 at the end of the year, with a total figure of $11.9 billion and representing 2.63 per cent of the system's total credit balance. As a result, the liquidity of the corporate bond market has improved and it is flourishing.

Credit institutions also accounted for 36.2 per cent of the total amount of corporate bonds issued on the market last year.

Governor Hong said, "As of March 30, there were 29 credit institutions issuing bonds with outstanding loans totalling around $18.6 billion, equivalent to 3.7 per cent of the total mobilised capital in the economy."

“Credit institutions are the second-largest bond issuer in the corporate sector, however, Vietnam's corporate bond market remains modest when compared to those of other nations. As a result, credit capital from bank loans is essential for enterprises, especially medium- and long-term financing. In 2021, the credit scale reached just over 124 per cent of GDP," Hong added.

This scenario has been causing considerable stresses and hazards for the domestic banking system as short-term capital is the primary source of funding – approximately 82 per cent of total capital mobilisation is derived from short-term funds.

Source: VIR