3 priorities to develop the corporate bond market

Corporate Bond Market Completes Its Legal Framework

According to Ms. Nguyen Thi Kieu Hanh - Head of Analysis at VIS Rating, Decree 200/2026/ND-CP regulating the private placement and trading of corporate bonds has helped complete the legal framework for the corporate bond market.

The Government issued Decree No. 200/2026/ND-CP on June 5, 2026, regulating the private placement and trading of corporate bonds in the domestic market and the issuance of corporate bonds to the international market, taking effect from the date of signing, including provisions to enhance the responsibilities of issuing enterprises. This will be a new regulation impacting the market in the second half of 2026. (Illustration photo)

"Since the Decree took effect, we have observed positive steps in the market, such as credit ratings becoming more common. Issuance dossiers of organizations are also more complete regarding the purpose of issuance and cash flows for principal and interest repayments.

In addition, we have also noted an increase in the use of payment guarantees from credit institutions and banks in recent issuance rounds," Ms. Hanh commented.

However, sharing at a seminar on Vietnam's credit outlook recently organized by VIS Rating, looking further ahead, representatives of the credit rating agency's analysts argued that the market still needs to develop a few other priorities to truly become a medium- and long-term capital channel.

Priority to Build a Yield Curve

First, completing the risk-based pricing mechanism and building a reliable yield curve. Although credit rating regulations have expanded, cases where rating is not mandatory still account for a large proportion of total issuance value. Issuance interest rates therefore still depend on negotiated relationships rather than being based on a standard benchmark corresponding to the level of risk, Ms. Hanh stated.

She also mentioned that in more developed bond markets in the region, such as Malaysia or Thailand, investors can fully refer to the yield curve across each rating grade to price bonds, creating a clear difference in capital costs between organizations with different credit profiles.

Meanwhile, in Vietnam, the interest rate spread between enterprises with different credit profiles is not yet clearly pronounced, making it difficult for investors to evaluate the correlation between risk and required interest rates. Statistical data shows no significant difference in coupon rates between bonds with delayed payments and those that fully and punctually fulfilled their payment obligations during the 2022–2023 market crisis. Therefore, continuing to expand the scope of credit ratings is truly necessary, helping investors accurately assess risks and interest rates while allowing issuers with good profiles to benefit.

Second, in the coming period, expanding the investor base, especially long-term institutional investors. Currently, Ms. Hanh stressed, participants in Vietnam's corporate bond market are still predominantly banks and individual investors, while participation from pension funds, mutual funds, and insurance companies remains relatively limited. Insurance companies are currently restricted from investing in corporate bonds issued for the purpose of debt restructuring. Although regulations have been eased, the investment ratio in corporate bonds by pension funds remains limited and must strictly comply with risk control regulations.

"This leaves the market without a sufficiently large long-term demand source to support issuing enterprises. Many enterprises still have to issue short-term bonds and subsequently extend maturities, facing refinancing pressure upon expiration. Therefore, in the long run, deeper participation by institutional investors is extremely necessary to meet the capital needs of issuing entities," the VIS Rating expert stated.

Enhancing the Execution Capacity of Intermediary Organizations

Third, enhancing the execution capacity of intermediary organizations in the market. Decree 200 added many investor protection mechanisms, but ultimate effectiveness depends on execution capability when risks arise. In reality, when an enterprise delays payment, liquidating collateral, recovering cash flows, or executing measures to protect bondholders' rights remains quite complex and involves multiple parties. Resolution times can be prolonged due to disputes or legal bottlenecks.

In addition to refining the legal framework, it is necessary to continue raising the responsibility, execution capacity, and independence of intermediary organizations, such as bondholder representatives or collateral management units. These are key conditions for investor protection mechanisms to achieve real-world effectiveness.

In summary, according to Ms. Nguyen Thi Kieu Hanh, following major steps forward in the legal framework, the corporate bond market still needs to fulfill three priorities: building a risk-based pricing mechanism, expanding the investor base (especially long-term institutional investors), and strengthening the execution capacity of intermediary organizations.