Vietnam’s corporate bond market remains a good channel for capital mobilization for businesses but the target of reaching a market size equivalent to to 25% of the GDP by 2030 remains a challenge, according to analysts at a workshop, co-hosted by Thoi bao Kinh te Vietnam / VnEconomy/ Vietnam Economic Times, Moody’s Rating and VIS Rating.  on May 17.

Prof. Dr. Hoang Van Cuong,  member of the National Assembly’s Finance and Budget Committee, remarked that after a boom from 2018 to 2021, the bond market crisis occurred in 2022, causing the corporate bond debt falling from 16% of GDP to approximately 11% of GDP. It currently shows no sign of recovery.

Meanwhile, the corporate bond market size remains small. The amount of bond capital is equivalent to just 8% of credits, according to Dr. Cuong.

Corporate bonds play a significant role as businesses are entering the period of production recovery. Many enterprises want to expand their production and business but face difficulties in accessing bank loans in spite of low interest rates, forcing them to depend on bond issuance. However, to issue corporate bonds successfully, enterprises need to gain confidence from customers, Dr.. Cuong said.

General Director of VIS Rating Tran Le Minh remarked that the size of the corporate bond market of Vietnam, estimated at $47 billion, is not small compared to others in the region. The figure is higher than that of the Philippines and Indonesia but lower than that of Malaysia and Thailand.

Mr. Minh agreed that achieving the goal of increasing the outstanding value of corporate bond to 25% of the GDP by 2030 is quite challenging.

If the average GDP growth of Vietnam remains at 5.5-6% for the next eight years, the size of the corporate bond market must be around $160-$170 billion, a 3.5-fold increase compared to the current size. It means, in the next eight years, Vietnam needs to issue an average of VND370 trillion ($14.6 billion) worth of corporate bonds each year, he explained.

In order to achieve the target, the market needs to meet three conditions, including transparency, a standard price system or a yield curve and restructuring investors, according to Mr. Minh.