According to Saigon Securities Incorporated (SSI), VND129.016 trillion worth of corporate bonds were offered to sell in the first eight months of the year and 90.08 percent was sold.

SSI estimated that the corporate bond market is valued at 10.2 percent of GDP.

Though commercial banks led the market in value of bonds issued (VND56.06 trillion), attention was also paid to real estate firms which carried out issuance campaigns with total value of VND36.946 trillion, or 31.5 percent of total bond value. Commercial banks were also among the buyers of real estate firms’ bonds.

SSI’s report showed that only 20 percent of real estate firms’ bonds were bought by commercial banks, while 9 percent were from securities companies. However, analysts commented that the ‘game’ in the stock market is mostly in the hands of financial institutions. This raises doubts that enterprises issued bonds not only to call for capital, but also to swap debts.

VND22.664 trillion, or 61 percent of bonds, were sold to domestic investors. However, it’s unclear who the ‘domestic investors’ are. Meanwhile, bonds cannot sell to individual investors who don’t have deep knowledge about the market.

Analysts, expressing their worry about high interest rates real estate firms offer, commented that the market is not strictly controlled by state management agencies.

VND22.664 trillion, or 61 percent of bonds, were sold to domestic investors. However, it’s unclear who the ‘domestic investors’ are. Meanwhile, bonds cannot sell to individual investors who don’t have deep knowledge about the market.

The analysts blamed the hot corporate bond market on the easy requirements stipulated in Decree 163.

They said the decree sets stricter requirements on listed companies’ information exposure and securities issuance results, anf it is too open in the issues related to joint stock or limited companies.

To be eligible to issue corporate bonds, issuers just have to have one year of operation, and if they still don’t have financial reports within 90 days by the end of fiscal year, or their finance reports have not been audited, they can use the semi-annual finance report of the last fiscal year.

Joint-stock companies only need to have the bond issuance plan approved by the board of directors to be able to sell bonds. Only when they issue convertible bonds with warrants, will they need the approval by the shareholders’ meeting.

Analysts said it’s the right time to tighten bond issuance by requiring compulsory credit rating of issuers.

According to Nguyen Hoang Duong from the Ministry of Finance, a credit rating is not compulsory. Therefore, there is only one service provider, Sai Gon Phat Thinh Rating. The ministry is considering amending the Securities Law to request issuers to undergo credit rating before issuing corporate bonds.

Hai Linh 

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