Corporate bonds

Experts urge improvement of legal framework for development of corporate bonds | Business

They were speaking at the seminar on “Sustainable development of the corporate bond market” organized by the Nguoi Lao Dong (Worker’s) newspaper on April 19.

Issuing corporate bonds is an effective channel for raising capital for companies. Therefore, the corporate bond market should not be frozen with several tightening measures from the management agency just because a few cases like Tan Hoang Minh Company and corporate bond issuers without credit rating, without a guarantee of payment and without collateral assets in the market have become “a bad apple that spoils the whole barrel”, according to experts.

Specifically, authorities should ensure that information on corporate bond issuances is transparent with complete financial statements and assets as collateral. In addition, there is a need to step up corporate credit rating activities before issuing bonds to reduce risks for investors, they said.

In the context where bank lending in risky channels, including real estate, BOT, BT and securities, is controlled, the corporate bond channel has been the salvation of many companies in these areas over the past of recent years. In addition, a developed corporate bond market will help diversify investment channels, helping to limit the goldenization and dollarization of the economy.

Currently, corporate bonds represent about 22.7% of the total amount of capital supplied to the economy each year, while capital raised through the issuance of shares represents only 3.5% of the total amount of capital injected. in the economy. The scale of corporate bond issuance in the primary market in 2021 has almost reached the value of new medium and long-term loans of the entire banking system.

According to Dr. Can Van Luc, chief economist of BIDV, the banking system provides the economy between 1.4 and 1.5 quadrillion VND (64.9 billion dollars) every year, but only 45% of this amount. are medium and long-term capital. Currently, the demand for medium and long-term capital in the economy is extremely high. It is estimated that during the period 2022-2025, the economy needs VND 3.15 quadrillion ($136.19 billion) per year to invest in society. While state capital accounts for only 25-26%, the rest must be raised from external resources, so the role of the capital market in general and the corporate bond market in particular is very important.

Currently, Vietnam’s corporate bond market capitalization is equivalent to 17.5% of GDP, which is much lower than other countries such as China, Singapore, South Korea and Thailand. Currently, this market still has a lot of room for growth.

By Nhung Nguyen – Translated by Thuy Doan