Few bond issuances occurred in the first quarter of the year, but since the second quarter, the value of bonds issued has been increasing. As of the end of November, 77 businesses had successfully issued VND220 trillion worth of bonds, according Nguyen Hoang Duong, deputy director of the Department of Finance of Banks and Financial Institutions under the Ministry of Finance (MOF).

Expert Can Van Luc also said that the bond market is recovering with the volume of bonds issued in November increasing by 15 times compared with the same period last year. Meanwhile, the bond value in the last five months was five times higher than that in the first half of the year.

The Vietnamese bond market has undergone a tough period after scandals were discovered in October 2022 which caused investors to lose their confidence in the market. Bond issuers were then under pressure to redeem the bonds they had issued, and they could not issue new bonds to mobilize capital for production and business.

The Vietnamese government then released decisions to ‘clear’ and ‘nourish’ the market, from perfecting the legal framework to maintaining the macro economy, and improving production and business environment, such as real estate and credit markets, to implement the state’s fiscal support policies.

The government issued Decree 08 that permitted temporarily stopping some regulations of Decree 65, plus a policy allowing enterprises and investors to negotiate on debt payment deadline extension and bond swapping have help defuse the risks in the market.

Nguyen Ngoc Anh, CEO of SSI Fund Management Company, said unlike the bond run  many months ago, the bond market is better now after the ‘soft landing’, which is attributed to Decree 08 and the separate bond trading system.

Luc praised Decree 08, commenting that the unprecedented policies are effective, including extension of bond debt payment deadlines and exchange bonds for real estate.

Moreover, the market has also benefited from policies aiming to untie the real estate market and released more bank capital.

According to Duong, as the green light has turned on, issuers and bondholders have been making efforts to negotiate debt payments.

Nguyen Anh Phong, CEO of the Hanoi Stock Exchange (HNX), said the separate bond trading system has gained achievements. On July 19, the first trading day, only 19 bonds of three businesses were put into transactions, while there are 760 bonds of 200 businesses. 

With positive signals seen recently, Anh believes that the corporate bond market may grow well in 2024.

The bond market plays an important role in the national economy, serving as an effective medium- and long-term capital mobilization channel for enterprises, helping diversify the financial market, ensure harmonization and balance of the capital market and help ease heavy reliance on bank loans.

In the time to come, when enterprises need huge capital to expand after the economy recovers, corporate bonds will be even more important 

However, to regain strong growth, the corporate bond market needs to restore investors’ confidence. Decree 08 can only give enterprises more time to handle their immediate difficulties, and many provisions of the decree are becoming invalid, which means that the market will be regulated by Decree 65 again.

According to Luc, the return of Decree 65 is necessary, but there should be a roadmap to develop the bond market.

There are only three credit rating firms in the market, and bond issuers don’t have the ‘habit’ of using credit rating service.

Luc said that it is necessary to diversify products in the bond market. The market still doesn’t have green bonds, project notes, social bonds and sustainable bonds.

According to MOF, as of the end of October 2023, the separate corporate bond balance had reached VND1 quadrillion, or 10.5 percent of 2022 GDP.

Though positive signs have appeared in the bond market, difficulties still exist, especially high interest rates. Issuers have to pay 14 percent per annum, or 2-3 times higher than bank deposit interest rates.

Manh Ha