Managing corporate bond market to develop sustainably

VCN - On August 18, 2023, Minister of Finance Ho Duc Phoc, Head of the Prime Minister's Working Group on stabilizing the stock market and corporate bond market chaired the fourth meeting of the working group. Attending the meeting were the group’s members including leaders some ministries and agencies and the assistance team of the group.
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The meeting
The meeting

At the meeting, reporting on the market situation, Mr. Nguyen Hoang Duong, Deputy Director General of Department of Banking and Financial Institutions, Ministry of Finance said that from 2017 to 2022, the corporate bond market developed strongly, contributing to balancing the capital market and the bank credit market, forming a medium and long-term capital mobilization channel for businesses.

However, after a period of hot growth, the market has incurred some risks from both issuers, service providers and individual investors. In 2022, the corporate bond market saw strong fluctuations due to law violations, while the macroeconomic and financial markets in the countries and in the world were complicated.

Facing that the situation, the Government and the Prime Minister gave drastic directions to stabilize the market by implementing policies to stabilize the macro-economy; reasonable fiscal policies; operating monetary policy flexibly; removing difficulties for businesses.

As a result, from the second quarter of 2023, the corporate bond market has shown signs of improvement and investor sentiment has gradually stabilized. Some organizations have actively bought back bonds to restructure capital. The bond restructuring negotiations continued to be carried out to help issuers in the immediate future have more time to recover their production and business and generate cash flow for debt repayment, creating conditions for improving and removing liquidity pressure in the long run.

Notably, market information is becoming more and more transparent in accordance with the requirement of centralized information disclosure on the specialized information page system of the Hanoi Stock Exchange.

According to data, from the beginning of the year to July 28, 2023, the volume of issued private corporate bonds was VND 62.3 trillion, mainly from real estate enterprises, of which about 60.5% of issued bonds issued have collateral assets.

Mr. Nguyen Hoang Duong said, the market has stabilized, but has not yet recovered, because the world situation continues to face many challenges; the domestic economy is difficult, so the capital demand of business decreases; Individual investors remain cautious.

Concluding the meeting, the Minister of Finance said it should continue to improve the corporate bond legal framework from the Law level and restructure the corporate bond market; continue to make comprehensive review and report to competent authorities to amend relevant legal documents (Securities Law, Enterprise Law).

Minister Ho Duc Phoc also requested that, facing predicted challenges for the corporate bond market, it is necessary to continue to stick to the guidelines and policies of the Party and to comply with the State's policies and laws, including the Enterprise Law, Law on Securities and guiding documents on private placement of corporate bonds.

The Minister affirmed, the State issues mechanisms to deal with problems by economic measures, in accordance with market rules and current law, and encourage businesses and investors to agree on bond payment plans in case enterprises cannot pay on time, ensuring security and order on the motto "harmonious benefits, shared risks".

Enterprises are responsible for paying in full and on time to investors according to the terms and conditions of the bonds. Accordingly, enterprises are responsible for coming along with the issued bonds. In addition, it is necessary to strengthen strict control and strictly handle violations. When detecting signs of violations, the competent authorities must immediately investigate, verify and handle to deter, correct and ensure the safety of the market.

Minister Ho Duc Phoc emphasized that it is necessary to clearly define the responsibilities of state agencies, enterprises and stakeholders in the market to ensure the stable management and operation of the market in accordance with the market rule, current law, and harmonization with the interests of the participants.

Minister Ho Duc Phoc said that the Ministry of Finance will note comments from ministries and agencies to report to the Government. He suggested that it should continue studying to take appropriate measures to solve problems quickly.

By Hoai Anh/ Huyen Trang

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