return icon Vietnamnet.vn

Corporate bond market: what will happen if tighter control is imposed?

The Vietnamese corporate bond market is experiencing tough days. Experts say that restoring confidence in bonds and protecting investors are both necessary.

According to the Ministry of Finance (MOF), the outstanding bonds in Vietnam are equal to 14.8 percent of GDP, which is much lower than countries with developed bond markets, such as South Korea (87.7 percent), the US (56.2 percent) and China (36.46 percent).

The corporate bond market has cooled down after the arrest of Tan Hoang Minh’s president with charges related to bond issuance. Analysts predict that the watchdog agency will tighten control over bond issuance and expressed their concern about the development of the bond market if this is done.

Pham Xuan Hoe, a respected economist, warned that if Vietnam shifts from loosening to tightening the bond market, it will be contrary to the development trend.

The possible strict regulations, for example, are not in line with market principles. The regulations would require that bond value issued not be 3 times higher than stockholder equity; and that enterprises not be allowed to issue bonds to contribute capital, buy into other businesses, or re-lend to other businesses.

He warned that extreme measures would shrink the corporate bond market and businesses would lose an important long-term capital mobilization channel.

Lawyer Truong Thanh Duc said in current conditions, when the global supply chain has been disrupted and enterprises lack capital for production and businesses, it is necessary to encourage the development of the bond market, which businesses can use to seek capital, or they will become paralyzed. 

He noted that watchdog agencies in Vietnam can tighten business conditions if they find it difficult to control the market.

For the corporate bond market, many strict regulations have been designed and Duc has found that 10 business conditions are much tighter than other business fields.

“The regulations will close the bond market,” he warned.

The thing that needs to be done is not closing the bond market, but building an open and transparent market.

Bonds are investments, not deposits, and there are latent risks in all types of investments. To protect investors, it is necessary to develop the credit rating in Vietnam to be sure that the issuance is transparent. The transparency will allow investors to make decision whether to buy bonds or not.

Can Van Luc, a finance expert, also said that the state should not make too much intervention in the market. The market is not faulty, and it is necessary to classify risks for investors to consider risks and make investment decisions.

The Government has approved the finance strategy by 2030, which says that outstanding corporate bonds would be equal to 20 percent of GDP by 2025 and 25 percent by 2030.

Tran Thuy

MORE NEWS

Vietnam, Cuba strive to lift two-way trade to US$500 million in next five years

The Vietnam-Cuba business promotion forum took place in Hanoi on September 30, seeing the participation of visiting Cuban Prime Minister Manuel Marrero Cruz and Vietnamese Deputy Prime Minister Le Minh Khai.

Vietnam defeat Saudi Arabia, top Group D at AFC Futsal Asian Cup

Vietnam beat Saudi Arabia 3-1 at the AFC Futsal Asian Cup 2022 in Kuwait on September 30, thereby topping Group D and having a high chance of securing a berth in the quarter-finals.

EuroCham Chairman praises strong and forward-looking government

Vietnam’s recovery has been ensured by strong and forward-looking government support which helped to bring in more high-profile FDI projects

Many firms suspend raising capital from stock market

Many enterprises have either stopped mobilizing capital or changed their capital-raising plans on the stock market amid existing uncertainties and disadvantages.

HCM City runs out of Covid-19 vaccines

HCM City has run out of Covid-19 vaccines over the past 10 days, said Nguyen Hong Tam, the deputy director of the municipal Centre for Disease Control and Prevention.

VIETNAM NEWS HEADLINES SEPTEMBER 30

Chinese police hand over wanted man to Lao Cai authorities

Foreign-invested enterprises face up to procedural barriers

Administrative procedures such as a prolonged timeline for obtaining business licences, as well as overlaps in the legal framework, are continuing to affect the expansion plans of many foreign-invested enterprises in Vietnam.

Reisereporter.de: Vietnam among ten attractive destinations to escape Europe’s winter

With its year-round warm tropical climate, breathtakingly beautiful scenery, and exciting culture, Vietnam is gradually becoming an attractive destination for German tourists.

VIETNAM BUSINESS NEWS SEPTEMBER 30

Real estate sector faces debt default risk

Shan Tuyet tea, valuable timber plants named ‘Vietnam Heritage Trees’

More than 1,300 Shan Tuyet tea plants in Ha Giang province and a group of valuable timber trees in Dak Nong province have been recognised as “Vietnam Heritage Trees”.

Fast fashion brands scale up for growth

Surviving and developing in a competitive fast fashion market remains a challenge for many brands, especially for newcomers.

Arguments arise as properties required to be traded on exchange

Controversy has arisen over the Ministry of Construction’s draft of the amended law on real estate trading as it requires real estate products to be traded on an official exchange.

Boeing accelerates cooperation with Vietnamese suppliers

Boeing, the world’s leading aerospace company based in the US, are accelerating cooperation with Vietnamese suppliers and universities to provide a foundation for long-term industrial growth.

Expecting coffee exports to hit a record $4 billion

Vietnam Coffee Cocoa Association (Vicofa) forecasted that if the export price of coffee remained at a high level, as in the first half of the year

Major investors worry as stock market weakens

The stock market boards have been covered with red amid investors’ rising caution. There are few buyers, while selling pressure still exists. Foreign investors’ behavior has affected the market.
back_to_top