Stagnant bonds could freeze real estate

That is the comment of Mr. Le Xuan Nghia, former Vice Chairman of the National Financial Supervisory Commission at the Economic and Business Forum 2022 with the theme of “adaptation and self-reliance” taking place on the afternoon of June 4.

According to Mr. Nghia, the corporate bond market is stagnating due to the lack of transparency, the lack of effective monitoring measures and the inspection and legal correction by authorities.

“The bond market stagnated, making it impossible for businesses to issue new ones to continue their projects, and unable to reverse debt to repay old debts; Few new projects. Enterprises do not have financial resources to develop the project. This fact causes secondary speculation to increase and pushes the price of real estate attached to land to increase sharply,” Mr. Nghia said.

In addition to the impact on the real estate market, the stagnation of corporate bonds can affect the entire financial market in general (including banks and securities). This has happened many times around the world and in Vietnam.

In the short term, to make the bond market healthy, Mr. Nghia suggested, it is necessary to improve the transparency and self-responsibility of enterprises. Authorities have stepped up remote monitoring, based on criteria such as honest financial reporting. Regular monitoring to avoid falling into a very bad situation before handling, mass inspection caused a great shock to the market.

After violations on bond issuance by some subsidiaries of Tan Hoang Minh Group, a series of weaknesses in the bond market gradually revealed. Most recently, the Ministry of Finance has just sent a report to the Government regarding the corporate bond market. According to this report, 20 real estate enterprises have the most debt of corporate bonds in 2021 with a total amount of more than 100,000 billion VND, interest on corporate bonds of these enterprises is from 8%/year to 12.9%/year. .

According to the Ministry of Finance, in order to offer individual corporate bonds to individual investors, many securities companies have “circled the law” to “transform” many inexperienced individual investors into specialized securities investors. business by a contract to buy a term of government bonds or listed securities within 2-4 days. Consulting for individual investors who do not directly purchase corporate bonds in their own name, but sign civil contracts with securities companies and commercial banks to buy on behalf of them.

Of the 358 companies that issued corporate bonds individually in 2021, 57 had business losses before the issuance, 45 had debt greater than 10 times equity, and 10 had debt. greater than 5 times equity.

At the forum, Dr. Nguyen Si Dung, former Vice Chairman of the Office of the National Assembly, raised challenges for the Vietnamese economy in general and businesses in particular in the context of the risk of rising inflation again. According to Mr. Dung, at present, the import and inflation situation affects the macroeconomic stability in the country and causes the price of Vietnam’s goods to rise.

“In an uncertain environment, flexibility is essential. Businesses need to have a very flexible response to the constantly changing environment. Being fully aware of the challenges of the world economy is an important component of strategic development planning and especially for production and business planning. Challenges can still create opportunities, the problem is that businesses need to recognize and seize those opportunities. Neither the strong nor the good will win. Those who can adapt are the last survivors”, recommended Dr. Nguyen Si Dung.

According to Quynh Nga