Bond fever gives warning to investors

DNHN - Issuance of corporate bonds in Vietnam is rapidly expanding, causing issuance specialists to provide advice and caution.

Public offerings and private placements totaled 5,509 trillion dong and 22,185 billion dong, respectively, in the first two months of 2022, according to the Vietnam Bond Market Association. That's up 31% and 51% from the same time last year.

Truong Minh Trang, the Managing Director of FinGroup's Financial Information Services, says that corporate bonds have been a key financial conduit in the last year.

They are expected to grow in popularity in 2020 and 2022 because businesses need a lot of money. 

In order to tighten business operations, the State Bank of Vietnam published Circular 16/2021/TT-NHNN governing the acquisition and sale of corporate bonds by credit institutions and foreign bank branches. 

Be wary of corporate bond risk. Apart from good improvements, corporate bonds pose hazards to investors. Deputy Director of the Ministry of Finance's Department of Banking and Financial Institutions Nguyen Hoang Duong says that state management authorities have warned people about the risks of investing in corporate bonds.

Experts urge that investors have financial understanding, investing experience, and the capacity to assess and accept risks in order to reduce the danger of corporate bonds without collateral, a repayment guarantee, credit rating, or listing.

Before acquiring corporate bonds, investors should read financial company assessment reports to grasp the bond issuer's aims and financial situation, as well as its prospects and hazards.

Investors must require that the bond issuer give complete information, such as the issuance purpose, the issuer's commitment to the bond, the issuance period, and the manner of repayment of principal and interest, as well as the issuer's financial capability and relevant processes and records.

According to financial analyst Dao Phuc Tuong, if the risk level is too high, investors should get their money back immediately by requesting the issuer or distributor to make a pledge to acquire all of the issued bonds.

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To maintain the long-term growth of the corporate bond market, issuers, service providers, and investors must understand and follow the legislation governing bond issuance, investment, and trading.

Corporate vouchersAccording to banking and finance expert Nguyen Tri Hieu, in light of the current severe economic environment, investors should exercise caution while purchasing corporate bonds.

 Mai Anh