return icon Vietnamnet.vn

Reviving investors’ confidence key to restoring bond market health: experts

While it is urgent to tackle the liquidity problem, a fundamental solution is regaining investors’ confidence and stabilising the corporate bond market, experts said.
Experts said it is vital to regain investors’ confidence to stabilise the corporate bond market. VNA/VNS Photo

The bond market is expected to become a main source of funding for companies in the long term, easing the pressure on banks.

But an array of scandals involving issuances by property developers such as Tan Hoang Minh, Van Thinh Phat and VKC Holdings has eroded investors’ faith.

Meanwhile, authorities continue to investigate and punish property and bond frauds.

Nguyen Tu Anh, director of the Communist Party Economic Commission’s general economic affairs department, said the market has ample room for improvement.

It is a flexible capital channel that allows enterprises to raise funds without causing any dilution in ownership, he pointed out.

Between 2017 and 2021, the bond market grew at 46 per cent annually, indicating the huge demand, he added.

Nguyen The Minh, director of analysis at Yuanta Securities, said there are three main channels for enterprises for mobilising capital: bonds, equity and loans.

“So far this year all these have been tied up.”

Le Xuan Nghia, a member of the National Financial and Monetary Policy Advisory Council, said the bond market would continue to face hurdles because of the lack of investors’ confidence.

Le Hoang Chau, chairman of HCM City Real Estate Association, said many real estate companies are also struggling with lack of liquidity and might have to make painful decisions to survive.

Many property developers are scaling down their business as can be seen by investment and construction delays, he said.

They have stopped embarking on new projects, issuing bonds and making IPOs, he added.

Huge pressure

A huge amount of maturing corporate bonds due for payment from now through 2024 is putting great pressure on issuers, who are mostly property businesses.

According to a report by credit rating agency FiinGroup, the 20 biggest bond issuers are facing liquidity problems since they cannot issue afresh but have to redeem maturing bonds.

The companies are all under great liquidity pressure over the next 12 months due to weak cash flows amid high interest rates, it said.

More than VND35 trillion worth of bonds issued by property companies, mainly unlisted, will mature in 2022 and over VND61 trillion in 2023.

Recommendations

Expert Le Duy Binh said it is vital to provide sufficient and transparent information to restore investors’ confidence.

Binh said it is necessary for the Government to intervene and resolve the difficulties faced by the corporate bond market, warning the banking system would otherwise be affected.

Bui Van Huy, director of DSC Securities Corporation’s HCM City branch, said investors should carefully evaluate the type of bonds they are holding before making a decision to redeem them prematurely.

The Government should allow commercial banks to participate in the purchase of bonds before maturity and treat them as a special form of credit, he said.

He also proposed offering preferential credit to key manufacturing industries and fields to help them tide over the current difficulties.

At an urgent meeting with securities companies and bond issuers, Minister of Finance Ho Duc Phoc ordered the bond issuers to consider selling assets to pay off their debts to investors.

“Bond issuers must maintain their credibility with investors whatever it takes.”

Deputy Minister of Finance Nguyen Duc Chi warned that bond issuers found committing wrongdoing would be severely penalised, stressing that the legitimate interests of investors would be protected under all circumstances.

Speaking at a recent meeting, PM Pham Minh Chinh stressed the Government’s determination to reform the bond, real estate and securities markets.

He too promised severe penalties for violations and assured that the rights and interests of people and businesses would be protected.

The Government has already set up three working teams for liquidity and currency, the property market and corporate bonds to carry out reforms. 

Source: Vietnam News

MORE NEWS

Striker Tien Linh placed 29th at Asia’s Best Footballer Award 2022

Vietnamese striker Nguyen Tien Linh has received only one point from voters of the Best Footballer in Asia Award 2022, finishing 29th in the list of 31 rated players altogether.

Panama-flagged AH SHIN fire under control in Vietnamese waters

Relevant Vietnamese forces on February 6 reached Panama-flagged AH SHIN and contained the fire that broke out on the cargo ship two days earlier.

VinaCapital Ventures pours 1 million USD into agritech startup

VinaCapital Ventures, a technology-focused venture capital fund of the Ho Chi Minh City-based VinaCaptial Group, has announced an investment of 1 million USD into Koina, an agritech startup founded in Vietnam.

Two Vietnamese fishermen missing in boat sinking in RoK

A fishing boat sank off the coast of Sinan county in the province of Jeonnam, leaving 9 out of its 12 crewmembers missing, including two Vietnamese citizens

Hai Phong: More ivory seized at Lach Huyen port

Another batch of smuggled ivory was found at Lach Huyen international port in the northern city of Hai Phong on February 6, the second of its kind within seven days.

No Vietnamese citizens affected by earthquake in Turkey, Syria so far

There has not been any information confirming Vietnamese citizens are among those affected by a 7.8-magnitude earthquake in Turkey and Syria, the most powerful over the past nearly 100 years.

Successor for Coach Park Hang-seo to arrive in Vietnam soon

If the negotiations are successful, coach Philippe Troussier may sign a contract with the Vietnam Football Federation (VFF) this week, becoming the successor to coach Park Hang-seo to lead Vietnam’s national football teams.

Positive signs ahead for Vietnamese pangasius exports to US, China

Despite a significant fall in exports in 2022, there are bright prospects ahead for pangasius exports this year thanks high demand from China and the United States – the two major markets for Vietnam, according to insiders.

Vietnamese students win gold at Invention Creativity Olympic 2023

Four Vietnamese students from Le Hong Phong High School for the Gifted in the northern province of Nam Dinh won a gold medal at the World Invention Creativity Olympic (WICO) 2023, which recently concluded in the Republic of Korea (RoK).

MIC acts as cradle for digital tech firms to test their products

Minister of Information and Communications Nguyen Manh Hung stressed that MIC is the leading ministry in the Make-in-Vietnam campaign and serves as the cradle for technology firms to experiment with and develop products.

Hanoi among world's top culinary destinations in 2023

Hanoi was voted by readers of the world's largest travel platform Tripadvisor as one of the world's top 20 culinary destinations in 2023.

Vietnamese young people set off for military and public security service

In 2023, more than 4,200 young people in Hanoi will perform military and public security service.

VIETNAM NEWS HEADLINES FEBRUARY 6/2023

Improvement of consular services to continue: official

VIETNAM BUSINESS NEWS FEBRUARY 6/2023

Agro-forestry-fishery exports reach 3.7 bln USD in January

Sister Sister 2 to compete at 2023 Osaka Asian Film Festival

"Chị chị em em 2", known as “Sister Sister 2” in English, directed by Vu Ngoc Dang will represent Vietnam at the 2023 Osaka Asian Film Festival scheduled to get underway from March 10 to 19.
back_to_top