Attempts to reinstate trust in the market for corporate bonds

DNHN - The positive resurgence of the corporate bond market can be attributed to the repercussions of market participation and government-implemented radical management policies.

Recent statistics indicate that the market for corporate bonds is manifesting distinct indications of recuperation. During a press conference, Mr. Nguyen Hoang Duong, Deputy Director of the Department of Banking and Finance (Ministry of Finance), stated that all market participants must abide by the law to foster a secure and robust market and bolster investor confidence.

The data on bond issuance that the Ministry of Finance just released earlier this month indicates that the market is beginning to recover. What is your assessment of this assertion?

As directed by the government and government leaders, solutions to stabilize the market have been synchronously implemented since the second quarter of 2023. As a result, the corporate bond market has exhibited indications of improvement, accompanied by an increase in volume. heightened release. Seventy enterprises issued in the first ten months of the year in a total volume of 180.4 trillion VND; premature buyback volume is 190.7 trillion VND (an increase of 30.2% compared to the same period in 2022).

Since the enactment of Decree 08/2023/ND-CP, a total of 179.5 trillion VND worth of corporate bonds have been issued. The volume of issuances in October 2023 amounts to 41 trillion VND, reflecting a growth of 17 trillion VND in comparison to September. Business enterprises have repurchased 190.7 trillion VND of pre-maturity bonds since the start of the year, an amount that exceeds the total number of issues. Alone in October 2023, companies repurchased approximately 14.2 trillion VND.

The positive resurgence of the corporate bond market can be attributed to the repercussions of the government's radical management policies and the alterations in market participants, in my opinion.

As is well-known, several corporate bond issuance-related law violations have caused instability in the corporate bond market. In response, government leaders have issued numerous directives to stabilize the macroeconomy and maintain operational flexibility. between monetary and fiscal policy, assisting businesses in resuming operations and production, and ensuring sufficient cash flow to repay debt, particularly corporate bond debt.

To provide businesses with additional time to address challenges, the Ministry of Finance has petitioned the Government to issue Decree No. 08/2023/ND-CP, which would temporarily delay the implementation of certain regulations outlined in Decree No. 65/2022/ND-CP. shortly about bonds, thereby aiding in the alleviation of liquidity constraints and progressively reinstating market confidence. The private corporate bond trading system will become operational on the Hanoi Stock Exchange on July 19, 2023. This development will facilitate the establishment of a primary market for private corporate bonds and enhance the liquidity of the corporate bond market. The development of retail is more sustainable.

Furthermore, the government, ministries, and branches have implemented numerous policies aimed at assisting businesses. These policies include the elimination of legal barriers for real estate projects, the promotion of administrative procedure reform for businesses, and the aforementioned measures. To provide capital for the economy, the State Bank of Vietnam permits commercial banks to extend the time for troubled customers to repay principal and interest, reduce interest rates, and maintain currency market liquidity...

Like other entities that engage in the corporate bond market, the Ministry of Finance further strengthened its propaganda efforts regarding the market after the synchronization of policy announcements. This effort aimed to increase awareness and foster a sense of compliance with the regulations set forth by the Ministry of Finance. Both issuing entities and service providers have undergone significant transformations in their recognition of the responsibilities and obligations that accompany market participation. This element contributes to the market's transparency and sustainable development.

Because the market environment is beginning to warm up and numerous factors are supporting the resurgence of corporate bonds, sir, what advice do you have for investors considering market participation?

According to Mr. Nguyen Hoang Duong, the Ministry of Finance has been consistently disseminating propaganda regarding corporate bonds, cautioning investors about market risks, and advising them to assess such risks before making investment decisions. private in nature. Enhancements will be made to the Ministry of Finance's propaganda, training, and dissemination of laws.

We strongly recommend it. To purchase individual corporate bonds, investors must possess the expertise of professional stock investors and, more significantly, complete knowledge of legal regulations and access to comprehensive information regarding the companies. Issuers and bondholders must conduct a thorough assessment of the issuing company's financial condition, exercise prudence when engaging in consulting services, differentiate corporate bond products from bank deposits, and evaluate the suitable degree of risk. by investing in bonds for profits and accepting accountability for one's investment choices.

Additionally, investors must be aware that the risk associated with bonds pertains to the issuer of the bonds, not the distribution organization (including distributing commercial banks). bonds in place.

Furthermore, the private corporate bond trading system at the Hanoi Stock Exchange has been implemented to facilitate the monitoring and supervision of information by state management agencies, support the liquidity of the corporate bond market, and increase the transparency of the secondary market. It also aids in the acquisition of corporate bonds. Professional stock investors are permitted to trade on the system for trading individual corporate bonds. Before purchasing bonds, investors are required to affix their signatures on a commitment form guaranteeing complete access to bond-related information. Additionally, service providers or bond sellers must certify that they have furnished investors with all requisite documents.

Shortly, what steps will the Ministry of Finance, in its capacity as a specialized management firm, take to ensure the stability and growth of the corporate bond market so that it becomes a viable capital channel? fruit, perhaps?

Mr. Nguyen Hoang Duong: It is evident that the authorities have gradually achieved stability in their approach to addressing violations of corporate bond issuance while concurrently implementing solutions about market operations, policy mechanisms, and enforcement. market and bolster the confidence of investors.

To unlock central capital sources, the Ministry of Finance will collaborate with relevant ministries and branches shortly to continue implementing solutions to stabilize and develop an open, transparent, secure, and sustainable corporate bond market. in addition to long-term development and investment, with an emphasis on the following solution groups:

The Ministry of Finance shall maintain close collaboration with the State Bank, the Ministry of Planning and Investment, and pertinent ministries and branches to execute fiscal policy, monetary policy, and other macro policies that safeguard the investment environment, ensure major equilibrium in the economy, and maintain macroeconomic stability. This will ensure policy consistency and stability, thereby instilling confidence among investors in their ability to engage in activities and make investments in the nation.

The Ministry of Finance intends to implement solutions concurrently that enhance policies about the reinforcement of corporate bond market management and supervision, the improvement of product quality, and the enhancement of service provision organizations' quality. To increase investor diversification, implement solutions that encourage the issuance of corporate bonds to the public on behalf of qualified businesses, in addition to the private issuance channel.

In addition, by evaluating and refining policy mechanisms to cultivate professional investors and long-term investors (investment funds), the market can generate sustainable investment demand.

Protecting the interests of investors, the Ministry of Finance continues to oversee and mandate that companies allocate all available resources towards the payment of principal and interest on delinquent bonds in adherence to legal regulations. It is mandatory for companies experiencing payment challenges to collaborate and engage in negotiations with investors to reach a consensus on a bond restructuring strategy.

In addition, the Ministry of Finance will further enhance its communication initiatives to restore investor confidence, stabilize investor sentiment, and encourage businesses and investors to invest and mobilize capital on the market.

Regarding oversight and inspection operations, the Ministry of Finance shall persist in guiding the State Securities Commission and functional units regarding the implementation of targeted inspections at development enterprises. issuance and service provisioning firms to bolster investor confidence, enhance the quality of service provision in the corporate bond market, and improve the issuance quality of issuing firms. Following the inspection, any potential violations, if any, will be disclosed to the market in a public statement.

However, as stated previously, the sustainable development of the corporate bond market is contingent not only on the proactive measures taken by state management agencies but also on market participants' awareness and adherence to legal requirements.

Much obliged sir!

Mr. Minh