Latest News about corporate bond
With Vietnamese regulators’ efforts to minimise the risks of corporate bonds’ mass issuance, the landscape is predicted to be cooled down compared to a frenzy of debt instruments in the previous period.
A new government decree tightens conditions on the issuance of corporate bonds. However, before the decree came into effect, enterprises flooded the market with new issuances.
Large corporations are rushing to seek capital through bond issuances before a new regulation, with stricter requirements, takes effect.
Under the amended Enterprise Law ratified by the National Assembly on June 17, nonprofessional investors are prohibited from trading corporate bonds issued in private offerings from January 1, 2021.
The recent skyrocketing demand for corporate bonds, fuelled by lowered interest rates and ebb and flow of the economy, has raised questions of high-yield coming with high risks.
The primary supply of corporate bonds has dropped sharply as the epidemic has upset enterprises’ business plans. Many have postponed bond issuance plans.
The lack of independent credit rating firms is hindering the development of the corporate bond market.
No longer relying on bank loans, real estate firms are seeking capital from many different channels, including bond issuance, stock sales and M&As.
Banks and enterprises have rushed to issue corporate bonds in 2019 with record high value and interest rates. The hot corporate bond market has raised concerns.
There are two typical characteristics of the real estate firms’ race to issue bonds – the high amount of bonds issued and the high interest rates.
The Ministry of Finance on November 19 made recommendations concerning corporate bonds, advising investors to carefully consider purchasing those bonds coming with high coupons, reported Sai Gon Giai Phong newspaper.
Commercial banks are rushing to issue bonds to balance short-term and long-term capital, and ensure their capital adequacy ratio.
Commercial banks are issuing international bonds because they need foreign currencies to satisfy dollar capital demand.
Since issuing corporate bonds has become easy thanks to open regulations, it is necessary to tighten control over bond issuance.
Forty percent of bonds issued by banks are bought by securities companies, but analysts believe that the real bond holders are commercial banks.
With an annual 20-30 percent growth rate, the consumer credit market has become an attractive sector.
VND9.103 trillion worth of listed corporate bonds were issued in the first quarter of 2019. Vietnamese enterprises are issuing bonds instead of borrowing money from banks when seeking long-term capital.
Personal money appears to be shifting from stocks and bank deposits to corporate bonds.