Enterprises need to proactively give credit ratings, conduct audits, and increase transparency to rebuild trust

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The corporate bond market has been in trouble since the violations of Tan Hoang Minh and Van Thinh Phat. Photo: Internet

Since the violations of Tan Hoang Minh and Van Thinh Phat were discovered and handled in 2022, the corporate bond market has faced difficulties; investors have lost trust in the market and issuers, the volume of new issues decreased, investors resold bonds before their maturity, and the volume of purchasing bonds before maturity increased.

To remove difficulties, the Ministry of Finance has coordinated with related ministries and agencies to research and offer solutions to develop a transparent and sustainable market, and strengthen audits related to corporate bonds at issuers and service providers; issued documents to request enterprises to make payment of principal and interest of maturity bonds to investors. In addition, the Ministry of Finance has worked with nearly 40 bond issuers to find solutions to strengthen investors' confidence, increase liquidity and remove difficulties for the market. Furthermore, regarding the completion of the legal framework, the Ministry of Finance has submitted to the Government for promulgation Decree 08/2023/ND-CP to remove current difficulties and create conditions for businesses to have more time to negotiate with investors about plans for debt restructuring.

On the enterprise side, to rebuild investors' trust, enterprises need to actively improve their financial capacity, restructure capital sources in line with their investment, production and business activities, and ensure resources to maintain stable production and business activities, thereby ensuring the source of repayment of bond principal and interest.

Moreover, the enterprises must fully comply with regulations disclosure; fulfil their responsibilities to investors according to the announced issuance plan, strengthening investors' confidence in enterprises.

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Further, the enterprises must actively use credit rating services and audit activities to enhance publicity and transparency to help investors understand the financial capacity and debt solvency of enterprises as well as the risks involved in bond investment.