At a conference on developing a safe, transparent and efficient capital market on April 22, Nguyen Thi Hong, Governor of the State Bank of Vietnam, said that credit institutions are both investors direct and major issuers in the corporate bond market.
The number of credit institutions buying corporate bonds rose to 41 at the end of the year, for a total amount of 11.9 billion dollars and representing 2.63% of the total credit balance of the system. As a result, liquidity in the corporate bond market has improved and is flourishing.
Credit institutions also accounted for 36.2% of the total amount of corporate bonds issued on the market last year.
Governor Hong said: “As of March 30, 29 credit institutions were issuing bonds with outstanding loans totaling approximately $18.6 billion, or 3.7% of the total capital raised in the economy.
“Credit institutions are the second largest issuer of corporate sector bonds, however, Vietnam’s corporate bond market remains small compared to other countries. Therefore, credit capital from bank loans is essential for businesses, especially medium and long-term financing. In 2021, the credit scale reached just over 124 percent of GDP,” Hong added.
This scenario has caused considerable strains and risks for the domestic banking system, as short-term capital is the main source of funding – around 82% of total capital mobilization comes from short-term funds.