Determined to “purify” the corporate bond market

Besides credit channels and stocks, corporate bonds are currently playing an important role in raising capital for businesses. However, a market in the early stages of development inevitably has problems arising as recently as, which is attracting public attention.

In the past 3 years, the average issuance volume of corporate bonds has been 467,000 billion VND/year, especially in 2021, the issuance will be up to 630,000 billion VND.

Despite the increasing volume and value of issuance, corporate bonds issued to the public still account for a modest proportion, only about 8%, while the remaining 92% are still privately issued bonds.

Corporate bonds are currently playing an important role in raising capital for businesses. (Artwork – Photo: VGP)

A product that all investors can participate in, the ratio is limited. A product that only professional investors can participate in is accounting for an outstanding proportion.

Non-specialists “turn” into professionals to invest in corporate bonds. Some bond sellers are willing to stand up for investors.

“If you do a professional investor certificate, it will cost you 5 million VND,” said a bond advisor.

If you don’t have a securities account, you don’t need to meet the prescribed conditions. According to the broker, it only takes a few million dong to get a certificate of professional investor from a securities company.

Completing the corporate bond market

The above is part of the current state of the corporate bond market. However, among corporate bonds issued privately, the number of high-quality bonds still accounts for the majority, but when the case of 9 bonds of Tan Hoang Minh Group was canceled, many people knew that There are many investors who buy individual bonds with low quality and they are not even official bondholders, just signing investment trust contracts.

In the past few months, consecutively, many businesses that have been handled for illegally selling bonds and using them for unknown purposes have shown their determination to correct, purify and perfect the corporate bond market.

Violations and related issues have been localized to ensure the interests of individual investors, as well as to help avoid creating negative impacts that bring a “domino” effect to bond issuers. corporate bonds in general.

“We assess that these are just small events, not reflecting the whole market. Retail investors, especially individual investors, need to pay attention to a few factors: first: It is necessary to carefully study the situation and capacity of the issuer, the second is to consider the business plan,” said Vice Chairman of the Vietnam Bond Market Association Pham Phuong Lan.

Among corporate bonds issued privately, although high quality still accounts for the majority, in order to avoid the situation of “confusion”, the Ministry of Finance is currently consulting on amending Decree 153 to continue to improve the legal framework on corporate bonds.

“Currently, the Ministry of Finance is consulting the Ministry of Justice on the amendment of Decree 153, in addition to stipulating the conditions for issuers to publicly disclose information about the use purpose. The second is to focus on classifying professional securities investors to better reflect the current reality,” said Ms. Phan Thi Thu Hien, Director of the Department of Finance, Banking and Financial Institutions, Ministry of Finance. Finance, said.

The role of the credit rating agency also needs to be recognized more clearly so that the corporate bond market can have an additional mirror for the health of the issuer. Decree 153 also stipulates a mandatory credit rating roadmap for some cases of bond issuance to the public from 2023.

In the near future, a centralized exchange for privately-issued corporate bonds will be built. (Illustration image – Photo: Investment Newspaper)

“The goal of developing the stock market also sets out the position and role of credit rating agencies. Currently, there are only two credit rating companies in the market. In the coming time, when the supply of credit ratings will be If the responsibility is large enough, the ranking is required,” added Ms. Phan Thi Thu Hien.

In the coming time, a centralized exchange for privately issued corporate bonds will also be built, thereby enhancing liquidity and transparency for the market.

Experience in developing the corporate bond market

In the past 3 years, the corporate bond market has grown at an impressive rate of more than 30% per year, bringing the size of this market to about 15% of GDP.

According to international organizations, there is still much room for development, compared with countries in the region such as Malaysia (56% GDP), Singapore (38% GDP). Bonds are still an important capital channel for the economy and need to be grown both qualitatively and quantitatively in the coming time.

Procedures for issuing bonds to the public in Vietnam are still quite troublesome, taking 2-3 months. Meanwhile, private placement is attractive to issuers.

“In many other markets, the number of private investors is limited to only 5-10 investors. In Vietnam, this number is much larger. Therefore, we want to encourage issuance. to the public, simplify the procedure, and conversely, limit the private placement,” commented Mr. Donald Lambert, Head of Private Sector Development, Asian Development Bank (ADB).

Looking further ahead, a developed bond market requires a credit rating system. However, on the contrary, in order to form a credit rating culture, a large enough bond ecosystem is required first.

“It is necessary to encourage bond issuers to give credit ratings to be an example of bond pricing and the benefits it brings compared to unrated bonds, thereby arousing the interest of the public.” Investors themselves will also gradually form the habit of requiring issuers to have a credit rating for their bonds in order to invest,” said Mr. Sing Chan Ng, Head of Management Department. Business System Asia – Pacific, Fitch Ratings, comments.

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