FiinRatings data shows that the size of bond credit is currently at 273.9 trillion VND (12 billion USD) at the end of 2021. (Photo: VNA)A number of violations related to corporate bonds handled recently, along with ongoingpolicy changes, including the State Bank of Vietnam's Circular 16 on regulations on bond tradingby credit institutions and the changes and additions expected to be included inthe draft Decree 153 on private placement, are likely to make the corporatebond market significantly reduce in size by 2022, said FiinRatings.
In 2021, the scale of mobilisation through the domestic corporate bond channelreached 682 trillion VND. This meant that the bond market was a very largecapital mobilisation channel, because this figure accounts for 54 percent ofthe annual percent change in the credit growth balance of the whole system in2021.
The corporate bond market has proven to play an important role as a medium andlong-term capital channel for the development of businesses in many differentindustries in the context of COVID-19.
Assessing the trends and prospects of the corporate bond market in the secondhalf of 2022 and 2023, FiinRatings experts said that businesses with a goodfoundation and better transparency, especially listed companies, would stillpromote bond issuance activities.
The bond channel is still an effective capital mobilsation channel in thecontext of very low interest rates for banking deposits.
Raising capital through the stock market also attracts investors, but the stockmarket is still in a phase of uncertainty. Besides, this activity is moresuitable for issuers that are public companies with transparency in informationaccording to current regulations.
Analysts of FiinRatings expect a change in the quality of the corporate bondmarket and this may be reflected in the massive growth of the public offering,especially from businesses with transparent credit records in the market.
Private placement will still be conducted, although it may be less active thanin the past years and aimed at a broader investor base, including professionalindividual investors, financial institutions such as insurance, bond funds,pension funds, instead of focusing mostly on commercial banks and securitiescompanies.
Commenting on the impact of corporate bond quality on the credit quality of thebanking industry, according to FiinRatings, together with securities companies,commercial banks have participated in buying corporate bonds through theprimary issuance channel to a relatively large extent, accounting for 36 percentin 2021 of the total issuance value from real estate businesses.
The application of State Bank's Circular 16 on regulations on bond trading,according to FiinRatings, is necessary to control the quality of bad debts,especially banks with weak asset quality, control the size of real estatecredit, and control credit transfer activities between the two channels ofbonds and bank loans.
FiinRatings data shows that the size of bond credit is currently 273.9 trillionVND (12 billion USD) at the end of 2021, accounting for only 2.16 percent oftotal earning assets and 2.63 percent of total credit outstanding of thecommercial banks in Vietnam.
The popularity of the corporate bond investment channel is not only large inscale, but also has the strong participation of individual and professionalinvestors through redistribution of bonds issued in the form of privateplacement from related organisations such as consultants and distributors inthe market./.
VNA
