VnEconomy/Vietnam Economic Times (VET), Moody’s Ratings and VIS Ratings co-hosted an workshop, themed “Developing the corporate bond market by 2030: A perspective from credit ratings”, on May 17.

Speaking at the event, Dr. Chu Van Lam, Editor-in-Chief of VnEconomy/Vietnam Economic Times, noted that with the development of the economy, the capital market and other financial services are increasingly perfected in structure and scale, contributing to the fruitful mobilization of investment resources.

Of which, he said, the corporate bond market has become an effective medium and long-term capital mobilization channel for businesses, helping these companies diversify their funding and decrease reliance on credit institutions. 

According to him, the corporate bond market has witnessed remarkable growth between 2018 - 2022, especially in the number of newly issued bonds with an average annual increase of 45%.

However, though having been better improved, the corporate bond market in Vietnam has not reached expectations with various remaining limitations and weaknesses, including  a lack of information transparency, not full compliance with legal regulations, weak commitments to investors,  and low capital absorption of the economy, among others., he said.

“The Ministry of Finance assessed that the cause of these problems came from the inadequacies mainly due to the cautious mentality of investors in the face of uncertainties and less positive prospects about the world economic-political situation as well as the problems of domestic market confidence and liquidity”, he explained.

Furthermore, investor sentiment in the corporate bond market is also affected after some companies were penalized for misconduct, he remarked, adding that some media outlets have reported unofficial or false information about certain companies issuing bonds, leading to a mass sell-off by investors, even for companies with good business performance.

In some cases,  banks directed uninformed depositors to buy corporate bonds, according to Dr. Lam.  Additionally, the focus on monitoring the purpose of bond issuance during inspections has also led to concerns among both issuing companies and service providers.

Comprehensive measures 

“To rectify this situation, the government has implemented a comprehensive set of measures, including reviewing and completing the legal framework, enhancing management and supervision, and proactively disseminating information to restore market confidence”, Dr. Chu Van Lam said.

In order to restore and develop the corporate bond market in accordance with international standards, authorities need to maintain the goal of building a stable and sustainable corporate bond market, avoiding creating a boycott mentality towards corporate bonds and preventing investors from demanding premature redemption of bonds en masse, he proposed.

Alongside this, the government can implement long-term solutions so that this market can continue to be an important capital channel for businesses, he added.

“Though, in order to increase the scale of the corporate bond market to 25 per cent of Vietnam’s GDP by 2030, attractive long term investment incentive mechanisms need to be introduced”, Dr. Chu Van Lam suggest.ed.

In this context, according to Dr. Lam, the Ministry of Finance needs to recommend that businesses consider using auditing, credit rating, and asset valuation services to assess their business and financial situation. Consequently, businesses should proactively and promptly provide investors with official information to enhance transparency, thereby gradually promoting bond issuance for capital mobilization.

With that in mind, Dr. Chu Van Lam emphasized that the workshop aims to share international experience and apply them to Vietnam in order to increase the size of the domestic corporate bond market to at least 25 per cent of GDP by 2030.