Developing a safe, healthy and transparent corporate bond market

VCN - The Ministry of Finance continues to recommend to investors and market members about risks in the corporate bond market.
Decree No. 65/2022/ND-CP will promote the corporate bond market Decree No. 65/2022/ND-CP will promote the corporate bond market
Building a trust mechanism and risk treatment tool for the corporate bond market Building a trust mechanism and risk treatment tool for the corporate bond market
Dr. Nguyen Tri Hieu: Need a Dr. Nguyen Tri Hieu: Need a "carrot" for the bank when implementing the 2% interest rate support package
Developing a safe, healthy and transparent corporate bond market

The corporate bond is still a key channel of capital mobilization for the economy. Photo: Internet

Investors are responsible for self-assessing risk levels in investment

The Corporate bond is a type of security product that confirms the payment of principal and interest by enterprises to investors who own bonds. The bond investors will enjoy interest and receive interest and principal payment from the company when the due date is reached, the Ministry of Finance said.

International practice and Vietnamese laws stipulate that corporate bonds are issued by enterprises on the principle of self-borrowing, self-paying and self-responsibility. Therefore, corporate bonds are not bank savings products .

Bonds are riskier than bank savings products but have higher interest rates than those that make investors accept the risk when buying corporate bonds.

Therefore, investors should make risk assessments by themselves, limit transactions of investment bonds and take responsibility for their own investments.

According to the Ministry of Finance, the domestic corporate bond market has gradually developed into a key medium and long-term capital mobilization channel for businesses and the economy, thereby reducing pressure on the bank credit channel.

During the development, the market has incurred potential risks. Therefore, the management agencies and the Ministry of Finance have followed market developments to perfect policies.

Accordingly, the legal framework for the offering and trading corporate bonds has been fully promulgated by the National Assembly and the Government in Laws, Decrees and guiding circulars of the Ministry of Finance. The Law on Securities and the Law on Enterprises stipulate two types of bonds: publicly placed and privately placed.

In 2021, the two bond issuance methods were specifically distinguished. The publicly placed bond is offered to all investors only after the State Securities Commission approves. The privately placed bond is only offered and traded among professional securities investors with knowledge, experience and assets to invest in products with a higher risk than the publicly placed bond.

The Ministry of Finance regularly disseminates corporate bonds and clarifies the characteristics of this product different from financial products of commercial banks such as savings deposits and certificates of deposit.

However, the strong development of the corporate bond market has some shortcomings. For example, some enterprises issue large volumes and high-interest rates while the financial situation is limited; some service providers do not meet service quality; some individual investors focus on interest rates and fail to assess the characteristics and nature of corporate bonds fully; some investors intentionally violate to become professional stock investors.

From 2019 to now, the Ministry of Finance has regularly informed about the corporate bond market and issued 17 press releases, including warnings to issuers, participants, and individual investors about the risks when investing in corporate bonds.

Corporate bond issuers must implement commitments with investors

According to the Ministry of Finance, in the corporate bond market, there are situations that some corporate bond issuers increase repurchasing the corporate bond, and individual investors resell the bond before the maturity date due to concerns that enterprises could not pay debts.

For this situation, the Ministry of Finance suggested that market participants should comply with the law's provisions.

The Ministry of Finance also suggests that the issuers must pay in full and on time the interest and principal of bonds in full and on time and implement commitments with investors. Therefore, the issuers are responsible for balancing their cash flows to ensure their commitments to investors when issuing bonds.

If the issuers face financial difficulties, they must actively develop a specific debt repayment plan and agree with investors to protect the interests of investors and the reputation of the issuers. If the two sides do not agree, it will be handled by the court's decision.

The service providers, consulting firms, issuance agents, depository agents, bond transferors and other service providers must coordinate with the issuer and the investors to ensure the signed obligations and the reputation when providing services in the market.

When the issuer faces payment difficulties, the investors should actively work with the issuer and the service providers to agree on an appropriate solution to protect the interests of both investors and issuers. In addition, investors must carefully analyze and classify their bonds to make appropriate decisions and should not listen to false rumours.

When individual investors are offered to buy privately placed bonds or intend to invest in corporate bonds, the investors need to request the distributors to provide accurate information about the issuer and the bond. In addition, the investors should understand the regulations in bond documents and information disclosures of the issuers.

Investors should also pay close attention to the responsibilities and commitments of service providers. The distribution of corporate bonds by commercial banks and securities companies does not mean that these organizations guarantee the purchase of bonds. These organizations are only service providers and enjoy service fees from the issuer. Therefore, the risk of the bond is still the risk of the issuer.

The Ministry said that the corporate bond market is still a potential market when the capital demand of the issuers for production and business development shortly is high. The Government's view is to continue to develop a safe, healthy and transparent market. Therefore, the corporate bond market participants should comply with the law.

On September 16, the Government issued Decree 65/2022/ND-CP supplementing regulations on determining professional securities investors to limit small and retail individual investors who are eligible for market participation. These are also the regulations to restrict individual investors from facing the risks of corporate bonds without the ability to analyze, evaluate, and protect individual investors.

The Decree also strengthens the responsibilities and obligations of the issuer in complying with the plan and offering documents requirements of the information disclosure regime, clarifies the responsibilities of service providers, and perfects the management mechanism and the inspection responsibilities of the management agency.

The Ministry of Finance said that the management agency would continue to study and perfect the legal framework and enhance the effectiveness of inspection and supervision. The implementation of Decree 65 and solutions to strictly handle violations of the corporate bond market recently will help the market adjust towards a more efficient market.

By Hoai Anh/Ngoc Loan

Related News

Vietnam secures VND 157 billion from state enterprise divestment in 2024

Vietnam secures VND 157 billion from state enterprise divestment in 2024

VCN - The Ministry of Finance reported that in 2024, the divestment of state capital in 5 enterprises (F1) generated VND 157 billion from an initial value of VND 145 billion
Focusing on inspecting inventory of public assets at units with large and complex assets

Focusing on inspecting inventory of public assets at units with large and complex assets

VCN - According to Official Dispatch No. 1456/BTC-QLCS on inspecting the preparation and implementation of the General Inventory of Public Assets recently issued by the Ministry of Finance, the inspection of the inventory of public assets focuses on units with large asset scale and large number of inventory items, complex assets, and slow implementation progress.
Vietnam gears up for potential inflation impact in 2025

Vietnam gears up for potential inflation impact in 2025

VCN - For sound price management and inflation control, Deputy Prime Minister Ho Duc Phoc directed officials to vigilantly track both domestic and international market dynamics. The goal is to proactively develop flexible strategies and solutions, enabling a swift response to any emerging challenges.
Complying with regulations of each market for smooth fruit and vegetable exports

Complying with regulations of each market for smooth fruit and vegetable exports

VCN - According to Mr. Dang Phuc Nguyen (photo), General Secretary of the Vietnam Fruit and Vegetable Association (Vinafruit), with the development momentum and increasing consumption demand from the Chinese market, the Vietnamese fruit and vegetable industry is setting new records and is expected to reach an export turnover of US $10 billion by 2030. With great potential and advantages in developing agricultural products, Vietnam has been affirming its position as one of the world's leading agricultural exporters.

Latest News

Personal income tax proposed for interest on some bank savings accounts

Personal income tax proposed for interest on some bank savings accounts

Instead of the current personal income tax exemption on interest from all individual bank savings accounts, the proposal would exempt tax only for low amounts of savings.
Banks set for aggressive bond issuance in 2025 to fuel growth

Banks set for aggressive bond issuance in 2025 to fuel growth

With a higher credit growth goal set by the SBV, banks are ramping up their efforts to secure funding through bond issuance.
Central bank cuts interest rate on bills for first time in 2025

Central bank cuts interest rate on bills for first time in 2025

According to data from the financial data provider Wichart, the SBV issued VNĐ19.6 trillion of bills in the past week. The interest rate on the bills decreased by 0.1 percentage point, from 4 per cent to 3.9 per cent on February 14.
The government seeks approval for revised GDP, CPI targets

The government seeks approval for revised GDP, CPI targets

VCN - The Government submitted to the National Assembly for consideration and comments on adjusting the target for the growth rate of gross domestic product (GDP) to 8% or more; the average growth rate of the consumer price index (CPI) to about 4.5-5%.

More News

Fiscal, monetary policies support demand stimulation, price stabilisation

Fiscal, monetary policies support demand stimulation, price stabilisation

These efforts, in conjunction with the implementation of monetary policies and other macroeconomic policies, aim to solve difficulties for businesses and the public, stabilise the macroeconomy, control inflation, ensure the balance of the economy, promote economic growth, and secure social welfare and people’s livelihoods.
VN’s credit conditions in 2025 expected to be stable

VN’s credit conditions in 2025 expected to be stable

The credit conditions for Việt Nam will stabilise in 2025, after improving substantially over the past year, the rating agency VIS is forcasts.
State revenue in first month of the year equal to 14% of the estimate

State revenue in first month of the year equal to 14% of the estimate

VCN - According to the Ministry of Finance, in January - the first month of 2025, the total state budget revenue is estimated at VND275.9 trillion, equal to 14% of the estimate; meanwhile, the total state budget expenditure is estimated at VND134.4 trillion.
Securities 2025 expects a breakthrough in scale and quality

Securities 2025 expects a breakthrough in scale and quality

VCN – The positive factors inherent in the macro economy and the Vietnamese stock market will continue to create the foundation for the market to maintain stability, good liquidity, and growth in both scale and quality in the new year of At Ty 2025, Chairwoman of the State Securities Commission Vu Thi Chan Phuong said.
Cash reserves in stock accounts at six-quarter low amid margin rise

Cash reserves in stock accounts at six-quarter low amid margin rise

These funds are readily available in investor accounts, but remained undeployed as of the year-end.
Five solutions for developing stock market in 2025

Five solutions for developing stock market in 2025

VCN - On February 5, 2025, at the Gong-beating ceremony to open the stock trading at the Ho Chi Minh City Stock Exchange (HOSE), Deputy Minister of Finance Nguyen Duc Chi introduced five solutions for comprehensive development of the stock market.
Minister of Finance Nguyen Van Thang works with GDVC at the first working day after the Tet holiday

Minister of Finance Nguyen Van Thang works with GDVC at the first working day after the Tet holiday

VCN- On February 3, the first working day after the Tet holiday, Minister of Finance Nguyen Van Thang and the delegation visited and worked with the General Department of Vietnam Customs (GDVC).
The stock market after Tết 2025 presents both challenges and opportunities

The stock market after Tết 2025 presents both challenges and opportunities

Việt Nam’s stock market following the 2025 Lunar New Year (Tết Nguyên Đán) presents a complex landscape of risks and potential gains, driven by foreign capital inflows, economic resilience, and looming corporate bond maturity pressures, according to one securities expert.
Opportunities and challenges in Việt Nam

Opportunities and challenges in Việt Nam's crypto boom

Việt Nam boasts one of the most active investment communities in the cryptocurrency sector. However, protecting investors and promoting sustainable growth requires a robust legal framework.
Read More

Your care

Latest Most read
Personal income tax proposed for interest on some bank savings accounts

Personal income tax proposed for interest on some bank savings accounts

Instead of the current personal income tax exemption on interest from all individual bank savings accounts, the proposal would exempt tax only for low amounts of savings.
Banks set for aggressive bond issuance in 2025 to fuel growth

Banks set for aggressive bond issuance in 2025 to fuel growth

With a higher credit growth goal set by the SBV, banks are ramping up their efforts to secure funding through bond issuance.
Central bank cuts interest rate on bills for first time in 2025

Central bank cuts interest rate on bills for first time in 2025

According to data from the financial data provider Wichart, the SBV issued VNĐ19.6 trillion of bills in the past week. The interest rate on the bills decreased by 0.1 percentage point, from 4 per cent to 3.9 per cent on February 14.
Focusing on inspecting inventory of public assets at units with large and complex assets

Focusing on inspecting inventory of public assets at units with large and complex assets

VCN - According to Official Dispatch No. 1456/BTC-QLCS on inspecting the preparation and implementation of the General Inventory of Public Assets recently issued by the Ministry of Finance, the inspection of the inventory of public assets focuses on units
The government seeks approval for revised GDP, CPI targets

The government seeks approval for revised GDP, CPI targets

The Government submitted to the National Assembly for consideration and comments on adjusting the target for the growth rate of gross domestic product (GDP) to 8% or more
Mobile Version