Topic: bonds

Violations by some issuers and commercial banks have eroded confidence in the bond market.

To ensure Vietnam’s corporate bond market develops stably and sustainably, the Ministry of Finance and the Ministry of Construction will work together to strengthen supervision over issuance activities and limit real estate enterprises issuing bonds with high interest rates. The Ministry of Construction also suggested supplementing regulations on the financial safety ratio of real estate enterprises after granting construction and investment permits for real estate projects.

Capital demand for green growth is quite large and long-term, so the burden of provision should not be put solely on the shoulders of the banking sector. According to Deputy Governor of the State Bank of Vietnam Pham Thanh Ha, “In the 2021-2030 period, to realize green growth, the government will focus on promoting resources from commercial loans and private investment such as green credit and green corporate bonds.”

Decree No. 65 on the private placement of bonds, issued by the government on September 16, has many new features and strict regulations on both issuers and investors. It has been supplemented with regulations stating that issuers are required to have credit ratings in certain cases, improving the obligation of issuers to disclose information to investors, and improving the professionalism of investors.

Bond issuances by real estate enterprises have been declining in recent times. According to the Vietnam Bond Market Association (VBMA), there were only eight individual corporate bond issuances in August, and only one was by a real estate company. One real estate enterprise issued bonds in July.

Vietnam’s corporate bond market has seen positive changes from a series of corrective measures by management units. Bonds have been issued again since May, while the volume issued in June was 55 per cent higher than in April.

While global capital is fleeing from stocks and bonds, Vietnam is still attracting strong inflows through exchange-traded funds (ETFs). In June, total inflows from ETFs reached nearly VND1.7 trillion ($72 million), for nearly VND8.4 trillion ($359 million) since the beginning of the year. According to SSI Research, capital from ETFs and active funds coming to Vietnam are now showing signs of shrinking.