How to regain investors' confidence in corporate bond market: experts

What causes investors to lose confidence in corporate bonds is that issuers publish false information, fake information, and limited quality of collateral or provide no collateral.
How to regain investors' confidence in corporate bond market: experts
Piles of Vietnamese banknotes. Photo vietnamplus.vn

Investor confidence has decreased significantly as a result of the stock market's fluctuations and some scandals involving corporate bonds that have occurred since the beginning of the year.

According to Phạm Ngọc Hưng, head of Phạm Hưng Law Office, an important part of what causes investors to lose confidence in corporate bonds is that issuers publish false information, while there is a limited quality of collateral or no collateral.

Many units operate as bond brokers without being licensed by the competent authority, while some enterprises do not have approved bond issuance plans according to regulations and do not have financial statements for the year preceding the year of issuance audited by an auditing organisation.

Hưng said that the bond market in general still has many healthy businesses. Bonds with collateral still have a high level of safety. Therefore, investors need to learn information from reliable and transparent sources. And before making an investment, investors should observe the current state of the business and record information from official and trustworthy sources.

In fact, many investors listen to and believe rumours when making investments, putting themselves in jeopardy. Meanwhile, brokerage units such as commercial banks and securities companies need to be more transparent in the process of advising on bond issuance.

Financial expert Đinh Thế Hiển said that one of the signs that corporate bonds are safe is that the high interest rate is not 30 per cent higher than bank lending rates; the issuers are public joint stock companies listed or rated AAA by a reputable rating agency.

Investors should learn about well-known companies that are among the top 500 large enterprises on the stock exchange, Hiển suggested. These companies often issue bonds with interest rates in the middle of the lending rates of commercial banks or higher, up to 4 per cent, until now, the interest rates can be at 14 per cent or less. Thereby, this interest rate shows stability and is relatively safe, reducing the risk ratio for investors.

Concerning bond maturity pressures in the near future, Mã Thanh Danh, Chairman of International Consulting JSC (CIB), stated that enterprises must first calculate the possibility of their own inner strength. Businesses that are doing well but have bondholders who request a bond buyback can use cash to help relieve pressure.

If companies do not have enough money, they can borrow more or mortgage a part of the bond at a higher interest rate to borrow money to buy the rest. Besides, with a stable business situation, enterprises can negotiate directly with bondholders so that they can wait for maturity.

If the bondholder insists on a repurchase, the enterprise can negotiate a conversion of the bond into shares. For example, Citi Bank has recently agreed to convert Novaland (HoSE: NVL) bonds into NVL shares at the price of VNĐ85,000 a share (US$3.47 a share), while the NVL market price is just over VNĐ20,000 a share.

Particularly for businesses with insufficient finance or poor business performance, the requirement to buy back bonds is really a burden.

Therefore, "enterprises need to prepare a clear corporate restructuring plan to negotiate with bondholders. If not, the business is forced to sell its assets to pay the bondholders. It can be land, brand, distribution system... In addition, businesses can also find solutions outside the market," said Danh.

Official data from the Ministry of Finance showed that for the first ten months of the year, the market recorded 23 bond issuances to the public, worth nearly VNĐ10.6 trillion, which accounts for 4 per cent of the total issuance value, and 413 private placements, worth VNĐ240.7 trillion, accounting for 96 per cent of the total issued value. Compared to the same period last year, the value of bonds issued to the public decreased by 56 per cent and the value of private placements dipped 51 per cent.

Of which, finance and banking is the leading industry group in terms of issuance value in the first nine months of 2022, accounting for 57.7 per cent of the total issuance value, down 15.2 per cent over last year.

The real estate sector accounted for 21.5 per cent of the total issuance value, a sharp decrease of 67 per cent year-on-year.

Source: VNA
vietnamnews.vn

Related News

Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

VCN - According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
Industrial real estate - "Magnet" attracting foreign capital

Industrial real estate - "Magnet" attracting foreign capital

VCN - Looking back at the development journey over the past 30 years, it can be affirmed that the model of industrial parks and economic zones has been playing an important role, as a driving force for growth and the process of industrialization and modernization of the country; a channel to attract investment resources, especially foreign direct investment (FDI), contributing to improving the business environment and enhancing competitiveness, ensuring sustainable development.
Many positive signals in the corporate bond market

Many positive signals in the corporate bond market

VCN - The corporate bond market is expected to enter a new development phase, gradually improving quality, continuing to develop and deepen.
Transparent and stable legislation is needed to develop renewable energy

Transparent and stable legislation is needed to develop renewable energy

VCN - Achieving net zero emissions by 2050 is a development goal that Vietnam has committed. This is mainly achieved through a strong energy transition and low-emission development. However, the transition to clean energy is not easy for Vietnam because building a clean energy supply system requires large investments. In addition, technology in the production and storage of renewable energy is still limited, making it difficult to ensure a stable energy supply.

Latest News

Monetary policy forecast unlikely to loosen further

Monetary policy forecast unlikely to loosen further

It will be difficult for the State Bank of Vietnam (SBV) to further loosen monetary policy due to a rising USD/VNĐ exchange rate pressure, experts said.
World Bank outlines path for Vietnam to reach high income status

World Bank outlines path for Vietnam to reach high income status

The World Bank (WB) has released a report which explores how Vietnam can upgrade its participation in global value chains to become a high-income country by 2045.
Strictly control public debt and ensure national financial security  2025

Strictly control public debt and ensure national financial security 2025

VCN – In order to achieve goal of strictly managing public debt and maintaining security and safety of the national financial system in 2025, it is necessary to ensure the borrowings and repayments of public debts is within the approved estimate; closely monitor public debt indicators to ensure that they are within the ceiling and warning thresholds approved by the National Assembly.
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

VCN - On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws. Concluding the session, Vice Chairman of the National Assembly Nguyen Duc Hai emphasized the need for the Government to direct the drafting body and relevant agencies to collaborate closely to finalize a persuasive and widely supported report, ensuring the quality of the draft law for the National Assembly's consideration and decision.

More News

State-owned securities company trails competitors

State-owned securities company trails competitors

Contrary to the outstanding performances in the banking sector, the securities subsidiaries of major banks have yet to fully leverage their potential, despite numerous inherent advantages.
Strengthening the financial “health” of state-owned enterprises

Strengthening the financial “health” of state-owned enterprises

VCN - The state economy plays a key role in the socio-economic development process, but it is necessary to strengthen the financial health and competitiveness of state-owned enterprises (SOEs).
U.S. Treasury continues to affirm Vietnam does not manipulate currency

U.S. Treasury continues to affirm Vietnam does not manipulate currency

VCN - In its latest report, the U.S. Department of the Treasury has positively assessed Vietnam's monetary policy, reaffirming that Vietnam does not engage in currency manipulation.
Exchange rate fluctuations bring huge profits to many banks

Exchange rate fluctuations bring huge profits to many banks

Net profits from the foreign exchange trading segment of many banks have gained positive results thanks to a strong USD/VNĐ exchange rate fluctuations this year.
A “picture” of bank profits in the first nine months of 2024

A “picture” of bank profits in the first nine months of 2024

VCN - Pre-tax profits for banks during the first nine months of 2024 remained positive, exceeding 200 trillion VND, solidifying the sector's position as a market leader.
Many challenges in restructuring public finance

Many challenges in restructuring public finance

VCN - Restructuring public finance is an important step to improve state financial management, ensure resources are allocated reasonably and effectively, contributing to the country's sustainable development. In addition to the achieved results, the process of accelerating public finance restructuring also faces many pressures.
Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

Tax declaration and payment by e-commerce platforms reduces declaration points and compliance costs

VCN - E-commerce platforms that declare and pay taxes on behalf of traders not only help to reduce the number of tax declaration points but also reduce the cost of compliance with administrative procedures for the whole society because only one point as the e-commerce trading platform implements tax deduction, payment and declaration on behalf of tens, hundreds of thousands of individuals and business households on the platform.
Disbursement of public investment must be accelerated: Deputy PM

Disbursement of public investment must be accelerated: Deputy PM

Deputy Prime Minister Ho Duc Phoc has called on ministries, agencies, and localities to accelerate the disbursement of public investment from now until the year-end and further tighten investment management.
HCMC: Domestic revenue rises, revenue from import-export activities begins to increase

HCMC: Domestic revenue rises, revenue from import-export activities begins to increase

VCN - The results of State budget revenue in HCMC in the first 10 months of 2024 are estimated to increase by 10% over the same period last year, of which the highlight is that revenue from import-export activities has begun to increase.
Read More

Your care

Latest Most read
Monetary policy forecast unlikely to loosen further

Monetary policy forecast unlikely to loosen further

It will be difficult for the State Bank of Vietnam (SBV) to further loosen monetary policy due to a rising USD/VNĐ exchange rate pressure, experts said.
World Bank outlines path for Vietnam to reach high income status

World Bank outlines path for Vietnam to reach high income status

The World Bank (WB) has released a report which explores how Vietnam can upgrade its participation in global value chains to become a high-income country by 2045.
Strictly control public debt and ensure national financial security  2025

Strictly control public debt and ensure national financial security 2025

VCN - According to the plan for borrowing and repaying public debt and foreign debt of the country in 2025, the total borrowing demand of the Government in the year is expected to be at VND 815,238 billion, an increase of 20.6% compared to the Government'
Revising the title of a draft of 1 Law amending seven finance-related laws

Revising the title of a draft of 1 Law amending seven finance-related laws

On November 19, 2024, the Standing Committee of the National Assembly (SCNA) discussed amendments and refinements to the draft of a law revising seven existing finance-related laws.
Transparency evates the standing of listed companies

Transparency evates the standing of listed companies

According to the Hanoi Stock Exchange (HNX), the number of companies placed under warning, control, or restricted trading on the listed and registered markets has increased over the past two years compared to 2022.
Mobile Version