Friday, February 23, 2024 8:27:21 AM - Markets open
VN-INDEX 1,227.31 -2.73/-0.22%
HNX-INDEX 234.01 +0.16/+0.07%
UPCOM-INDEX 90.57 -0.03/-0.03%
Corporate bond market to continue to face headwinds in H2
Vietnam News - 7/26/2023 3:29:26 PM
 (0 ratings. You must sign in to rate.)
The corporate bond market will continue to face headwinds in the second half of the year, experts said.
 
 
Nguyễn Bá Khương, an analyst at stock brokerage VNDirect, has warned that a significant amount of corporate bonds are set to mature this year, leading to financial constraints for issuers and potential difficulties in meeting bond redemption obligations.
 
According to VNDirect, around VNĐ273 trillion (US$11.57 billion) worth of corporate bonds will be maturing this year, with the majority coming due in the last two quarters.
 
Many issuers, particularly property developers, have already struggled to meet their bond redemption obligations, which has eroded investor confidence in the market.
 
While more than VNĐ42 trillion worth of corporate bonds were rolled over in the second quarter, providing a short-term solution, this does not address the fundamental issues at hand, experts noted.
 
A decree issued in March allows issuers to roll over bond maturities by up to two years if investors agree. However, if investors do not agree, businesses must fulfill their bond redemption obligations.
 
Issuers also have the option to negotiate with bondholders to repay with other assets.
 
 
A stalled construction site in District 1, developed by Tân Hoàng Minh Group. Many issuers, particularly property developers, have already struggled to meet their bond redemption obligations. — VNS Photo Bồ Xuân Hiệp
 
Transparency and disclosure key to restoring credibility
 
To restore credibility in the market, experts emphasised the need for a comprehensive approach. Transparency and disclosure are key factors in rebuilding trust, they said.
 
Companies issuing bonds must provide clear and comprehensive information about their financial health, business operations, and risk factors. This allows investors to assess the creditworthiness of the issuers and make informed decisions.
 
In addition, regulatory oversight and enforcement need to be strengthened.
 
Regulatory bodies should establish stringent guidelines for issuers, underwriters, and rating agencies, and ensure compliance with relevant regulations.
 
Any attempts to manipulate or misrepresent information should be met with severe penalties and legal consequences.
 
It’s also important to develop a well-functioning secondary market for corporate bonds, which would facilitate efficient bond-pricing mechanisms, providing investors with liquidity and enabling them to enter or exit positions as needed.
 
Enhancing investors' awareness of the fundamentals of bond investing, including credit risk, interest rate risk, and market liquidity, is also crucial.
 
Experts have proposed settling the various scandals involving bond issuances by major property developers and protecting investors as soon as possible to free up the frozen market.
 
The Ministry of Finance recently established a trading platform for privately placed corporate bonds (PPB).
 
Minister of Finance Hồ Đức Phớc said the launch of the trading platform would give fresh impetus to the market, improve liquidity, and provide companies better access to capital.
 
He, however, pointed out that there is still a lot of work to do to build a fully-fledged market that is attractive to global investors.
 
Economist Đinh Thế Hiển said the trading platform allows bond issuers to service their bonds that are coming due, and provides companies with good financial records better access to capital.
 
The corporate bond market experienced significant growth in 2020 and 2021, driven by increased capital demand from property developers and banks.
 
However, the collapse of the property market and the recent investigations into bond issuance and improper capital use by large firms have contributed to the current problems faced by the market.
 
The Government has established three committees to carry out reforms in liquidity and currency, the property market and corporate bonds.
 
The Prime Minister Phạm Minh Chính has also instructed credit institutions to reduce costs to lower loan interest rates for businesses and support economic recovery. — VNS
 
Read original article here
Newer News
21/02 Credit growth declines by 0.6% in first month of 2024
19/02 Foreign exchange rate forecast to be under control in 2024
19/02 Many people buy gold on God of Wealth Day, gold prices down
16/02 Changes to Law on Credit Institutions reduce ownership limits in banks
16/02 Central bank pushes others to boost lending from start of New Year
16/02 Asia - biggest source of overseas remittances to HCM City in 2023
27/12 Bank bad debts forecast to remain under great pressure in 2024
27/12 Domestic gold prices hit record-breaking VNĐ80 million per tael
23/12 Bank credit growth improves in HCM City
22/12 Bank credit growth improves in HCM City
Older News
25/07 Vietnamese banks prove attractive to foreign investors
25/07 Banks’ bond buybacks might affect credit growth in H2 2023
25/07 Remittances to HCM City up 37 per cent in H1, likely to hit $7 billion this year
25/07 VAFI recommends building risk-free bonds
24/07 VCB: Vietcombank sets record market cap
24/07 Việt Nam, US promote further financial cooperation
24/07 Profit growth of banking industry forecast to slow in 2023
18/07 Deputy PM: banks consider solving financial difficulties of seafood businesses
10/07 More than $1.7b worth of maturing corporate bonds rolled over
10/07 Finance ministry unveils wrongdoings of insurance companies
 
Newsletter Signup
Top Stories
Market remains upbeat on large-cap stocks
Central bank pushes others to boost lending from start of New Year
Domestic gold prices hit record-breaking VNĐ80 million per tael
Market steady due to low risk appetite
Green development gains momentum in VN's listed business community
Market Update
Last updated at 3:05:01 PM
VN-INDEX 1,227.31 -2.73/-0.22%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Portfolio
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.