Photo: nguoidaibieu.com.vn

Vietnam’s corporate bond market is showing signs of recovery after a series of local banks announced their plans to issue more bonds from now through early next year.

Noteworthy are plans by Saigon Thuong Tin Commercial Joint Stock Bank (SacomBank) to sell 3 trillion VND (168 million USD) worth of bonds in the third quarter of this year; and Saigon Commercial JS Bank (SCB) with 1 trillion VND worth of convertible bonds in the first quarter of next year.

The market has rebounded since the end of last year with successful issuances of 1 trillion VND worth of bonds by Vinpearl Tourism and Trading Joint Stock Company; 3 trillion VND by Vietnam Shipbuilding Industry Corporation (Vinashin); 3.5 trillion VND by Electricity of Vietnam Group (EVN) and 700 billion VND by Kinh Bac Urban Development Company.

Corporate bond purchasers are mainly banks and financial organisations who consider their investment in corporate bonds a good channel to disburse capital as they can yield higher interest than governmental bonds, said bank leaders.

As for the enterprises, bond issuance can enable them to take the initiative in using long-term capital while avoiding tight supervision as happens when they borrow.

However, according to the Asian Development Bank’s statistics, the corporate bond market reached only 500 million USD by the end of last year - a modest figure as compared to the total value of circulated governmental bonds of up to 12.4 billion USD.

The Ho Chi Minh Stock Exchange’s statistics showed that the monthly average trading value of corporate bonds reach around 200-300 billion VND in comparison with a total of 14 trillion VND in listed bonds.

Vietnam’s Bond Market Association Vice Chairman Le Duc Tho attributed this sluggishness to the solvency of bond issuing enterprises, saying that it is necessary to set up a legal system to protect investors and a mechanism to ensure their money is secure as they pour it in to corporate bonds.

Transparency in bond issuance is also needed to create a more favourable climate for investment, he added.

Source: VNA