Individual corporate bonds are still bright

09-Feb-2021 Intellasia | Dau tu Chung khoan | 6:02 AM Print This Post

It is expected that, in 2021, the secondary market for private securities investors will be established.

The private corporate bond market “cooled down” in the fourth quarter of 2020, but in general, 2020 is a boom year, recording a sharp increase in issuance volume and a much higher proportion than bond issuance to the public.

According to statistics of the Hanoi Stock Exchange, in 2020, the total value of corporate bonds issued will reach 437.689 trillion dong, an increase of 38.8 percent compared to 315.441 trillion dong in 2019. In which, the value of bonds private issuance votes reached 403.468 trillion dong, up 36%; issued to the public reached 34.221 trillion dong, up 82.7%. The number of businesses issuing bonds is concentrated in banking, real estate, and manufacturing.

Le Manh Hung, general director of Vietcombank Securities Company (VCBS) said that, by 2021, corporate bonds will still be an effective capital mobilisation channel for the economy in general and businesses in particular.

Currently, the legal corridor on capital market has been basically completed, the bond market is expanding in size and approaching international standards. In January 2020, VCBS advised to issue and successfully distribute 2 trillion dong of bonds for Truong Hai Auto Joint Stock Company (THACO).

In fact, Decree 81/2020/ ND-CP on issuing corporate bonds, effective from September 1, 2020, somewhat limits the size of the issue when specifying whether corporate bond outstanding is not issued separately in excess of five times of equity, the next issuance must be at least six months apart from the previous issuance, the enterprise must sign a consulting contract with a consulting organisation on documents for the issuance of bonds…

However, the above provisions have been abolished by Decree 153/2020/ ND-CP, effective from January 1, 2021.

The Decree only requires the issuing company to be a joint stock company or a limited company; paying both principal and interest of issued bonds or paying all due debts in 3 consecutive years; meet financial safety ratios and safety ratios in operations in accordance with specialised laws; have an approved and approved bond issue plan; have financial statements of the year preceding the year of issue audited by a qualified auditing organisation.

VNDIRECT Securities Company stated that the corporate bond market will be active again in 2021, thanks to a number of problems and shortcomings in Decree 81/2020/ ND-CP that have been removed.

A new regulation in Decree 153/2020/ ND-CP is that the buyers of corporate bonds are only for professional investors. Specifically, privately issued bonds are only issued to professional investors and do not need to be licensed.

Professional securities investors, when buying corporate bonds separately, self-assess and take responsibility for the risks. Issuing businesses and organisations providing corporate bond services, when having violations, will be administratively sanctioned according to regulations.

At the seminar on disseminating new regulations on corporate bond issuance held by the Ministry of Finance in HCM City on January 26, 2021, Nguyen Hoang Duong, deputy director of the Finance Department of Banks and Organisations According to finance, the Ministry of Finance shared, with the completion of the legal framework through Decree 153/2020/ ND-CP, it is expected that in 2021, the secondary market for private bond transactions for stock investors professional contract will be born.

Duong said that in order to increase the liquidity of corporate bonds privately issued as well as help the market to have information on bond transactions after the issuance, Decree 153/2020/ ND-CP has regulations on the organisation of the secondary trading market for corporate bonds to be issued separately.

The Ministry of Finance is assigned specific guidance on this matter. At present, the Ministry has assigned the Hanoi Stock Exchange to be the unit to build the secondary corporate bond market model, suitable to the development situation of Vietnam.


Category: Finance, Vietnam

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