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| “It is necessary to strengthen information and communication so that investors fully understand their rights and obligations”, said Minister Ho Duc Phoc. Photo: Duc Minh. |
Minister of Finance Ho Duc Phoc - Head of the Working Group attended and chaired the meeting. The Working Group includes leaders of ministries and branches and the Working Group's assistants.
The corporate bond market has re-stabilized
According to Mr. Nguyen Hoang Duong, Deputy Director of the Finance and Banking Department, MoF, the corporate bond market grew significantly between 2017 and 2022, contributing to the gradual development of the balance between the capital market and the bank credit market in line with the development guidelines and orientations of the Party and the State, forming a medium and long-term capital mobilization channel for businesses.
However, the market that has recently grown rapidly poses considerable risks for issuers, service providers, and individual investors. In 2022, the corporate bond market fluctuated sharply due to law violations, while the macro economy and financial markets at home and abroad were complicated, interest rates increased, and there were times when the liquidity of the economy encountered difficulties.
In response to this circumstance, the Government and the Prime minister have made a concerted effort to stabilize the market. As a result, strategies to stabilize the macroeconomy and properly manage fiscal policy must be undertaken concurrently, (including lowering, relaxing, delaying taxes, assisting impacted people, and speeding up the disbursement of public investment). Furthermore, it is necessary to manage flexible monetary policy (ensuring liquidity, lowering interest rates, easing credit availability, extending debt, and transferring debt groups); remove obstacles for businesses, including the real estate market.
From the beginning of the year to July 28, 2023, there were 36 private issuers with an aggregate volume of 62.3 trillion VND. Accordingly, the corporate bond market has stabilized but has not yet recovered due to economic difficulties, and hence, business capital demand has fallen. In addition, demand for corporate bond investment has steadily declined since the beginning of 2023. Insurers have not been allowed to invest in some corporate bond products under the Insurance Business Law and individual investors remain cautious. Businesses and service providers who are concerned about inspection should choose a different financing mechanism.
Indeed, the legal framework and mechanisms, and policies for the operation of the corporate bond market have been gradually promulgated from Laws, Decrees to Circulars. The development of the corporate bond market has been in line with the orientation of the Party, the National Assembly, and the Government on balanced development between the capital market and the credit market; between the stock and bond markets; between Government bonds and corporate bonds. As a result, businesses have initially increased capital mobilization through bond issuing, lowering their reliance on bank credit lines. There are more investment products available to investors on the capital market. Enterprises, particularly credit institutions, can mobilize medium and long-term capital.
Since the second quarter of 2023, the corporate bond market situation has shown signs of improvement, investor sentiment has gradually stabilized, and some organizations have actively bought back bonds to restructure capital along with the drastic and synchronous implementation of solutions to stabilize the market under the direction of the Government and the Prime Minister. Bond restructuring negotiations continue to allow issuers to have more time to recover their production and produce cash flow for debt repayment soon, thereby easing liquidity pressure in the long run.
Strictly handle businesses that do not pay debts
According to the MoF, in the near future, it is essential to adhere to the policies and laws of the State, including the Law on Enterprises, the Law on Securities, and guiding documents on the private issuance of corporate bonds.
The State runs to ensure macroeconomic stability and remove difficulties for enterprises to stabilize their operations and provide adequate and timely payment sources for bond investors under the bond contract.
The State establishes a problem-solving mechanism through economic measures, complies with market laws under current law, and encourages businesses and investors to agree on a bond payment plan in case businesses cannot pay the principal and interest of bonds in full and on time according to the issuance plan, ensuring security and order on the tenet of "harmonious benefits and shared risks."
Enterprises are responsible for their debts and they must not transfer their responsibilities and risks to the State's responsibilities and risks. Simultaneously, it is crucial to strictly handle cases of enterprises procrastinating to repay debts and cases of taking advantage of causing information security disruptions. Investors assess their ability on their own to organize the issuance of bonds to pay the interest and principal of bonds in full and on time, and they must bear responsibility for their investment decisions.
Furthermore, it is necessary to continue to improve the legal framework from the legal level and restructure the corporate bond market in the direction of encouraging public issuance, before moving on to private issuance focusing solely on institutional investors.
Minister of Finance Ho Duc Phoc - Head of the Working Group concluded the meeting by emphasizing that the MoF will continue to review and report to competent authorities on legal documents related to the private issuance of corporate bonds (Law on Securities, Law on Enterprises) in the upcoming months.
According to Minister Ho Duc Phoc, the Government continues to direct the synchronous implementation of macro-stabilization solutions, inflation control, and investment environment stabilization to sustain growth.
Minister Ho Duc Phoc emphasized the importance of management agencies strengthening inspection and supervision, urging and reminding businesses to pay in full for due bonds, prioritizing repayment to bondholders, and contributing to the stabilization of society. At the same time, cases of violations need to be strictly controlled and handled regularly. Moreover, it is fundamental to strengthen information and communication, particularly on the scope of the law, manipulation, and exploitation; propagate investors’ obligations and rights and promote management of public-issued bonds.
The MoF will receive, summarize, and report to the Prime Minister on the opinions of representatives from ministries and branches.
