Tag: corporate bonds

Commercial banks remained the leading issuers, accounting for 73% of the total value.

Real estate firms issued bonds worth more than VND22.1 trillion ($833 million) during the month.

Commercial banks continued to dominate, accounting for 73% of the total.

Bank bonds dominating the market, accounting for 75%.

The banking sector remainining the largest issuer.

Figure represents a three-fold increase year-on-year.

Real estate sector accounts for 59.3% of total.

Measures needed to restore trust among investors.

The stock market fell significantly in the second quarter of this year. Kis Securities believes that profits at securities companies in the closing months will be equal or slightly down year-on-year. It also touched on three factors affecting the securities industry from now to the end of 2022: the implementation of the KRX system, the redistribution of corporate bonds, and uncertainties over an upgrade to the local stock market.

Analysts believe that positive points in the revised Law on the Insurance Business include the removal of limits on investment in stocks and corporate bonds and the granting of permission to invest in trust funds. The revised law also allows foreign investors to own up to 100 per cent of charter capital in insurance or reinsurance companies.

According to the Ministry of Finance (MoF), corporate bonds are mostly purchased by credit institutions and securities companies, who often then sell them on to individual investors, resulting in the volume of bonds held by these investors standing at 32.6 per cent. In order for the bond market to develop transparently and effectively, the MoF will report to the National Assembly on amending a number of provisions in the Law on Securities and the Law on Enterprises.

Vietnam’s real estate market is experiencing a logjam in liquidity. Analysts have said that as credit and corporate bonds are shrinking, real estate prices may fall by up to 30 per cent. However, the Chairman of the Vietnam Association of Realtors (VARS) remains optimistic that the real estate market still holds substantial potential for development and can grow at an average annual rate of 15 per cent.

According to the Ministry of Finance, the total volume of corporate bonds set to mature in the three years from 2022 to 2024 is some VND745.4 trillion ($31.95 billion), primarily those of real estate businesses and credit institutions, which have around VND208 trillion ($8.9 billion) each.

According to VnDirect Research, the total value of individual corporate bonds maturing in the third quarter of 2022 is nearly VND65 trillion ($2.7 billion), 82.7 per cent more than in the second quarter and 244 per cent more than in the third quarter of last year. Real estate accounts for the most, followed by banking.

Vietnam’s corporate bond market has grown strongly in recent times but been accompanied by risks regarding product quality. Management agencies must therefore warn investors and at the same time take drastic action to ensure the market reaches its potential to develop stably. The market now accounts for nearly 17 per cent of GDP and has become an important medium and long-term funding channel for businesses.

The corporate bond market is expected to continue to develop this year, with expansions seen in the size and diversity of products and with an increasingly complete legal framework that ensures sustainable development. Low interest rates will also work in the market’s favor.

Aside from risks such as a sharp decline in deposits and a sharp increase in bad debts, together with greater competition from fintech companies, banks also face risks relating to real estate corporate bonds. The State Bank of Vietnam has therefore issued regulations restricting banks from pouring money into the corporate bond market.

The State Bank of Vietnam (SBV) has specified cases where credit institutions are not allowed to purchase corporate bonds. Credit institutions are also not allowed to sell corporate bonds to subsidiaries of these credit institutions.

Real estate has taken the lead in the value of corporate bond issuances. As of October 15, the value of corporate bonds issued this year by the real estate group stood at more than VND148 trillion ($6.48 billion), accounting for 37 per cent of such issuances.

According to the General Statistics Office, in the first eight months of this year, 85,500 enterprises in Vietnam had ceased operations. When done well, corporate bonds would offer salvation for the country’s economy in the context of banks being overloaded and outstanding credit representing 150 per cent of GDP. Corporate bonds are a risky investment channel when not strictly controlled, however, and could endanger the entire financial system given that many businesses are in debt while facing difficulties from Covid-19.