Synchronous solutions to regain stability for the corporate bond market

Deputy Minister of Finance Nguyen Duc Chi spoke to the press. Photo: VGP

The corporate bond market

Accordingly, the Deputy Minister of Finance acknowledged that the current situation is indeed difficult for the corporate bond market, especially the privately issued corporate bonds.

A manifestation of this situation, according to Deputy Minister Nguyen Duc Chi, by November 25, 2022, the issuance volume tended to decrease, reaching only VND331.8 trillion, down 31.6% over the same period last year, especially gradually decreasing over the quarters.

Meanwhile, there is a phenomenon of early redemption, that is, when the bond has not expired yet, the issuer buys it back or the investor proposes to buy it back.

In addition, according to a leading representative of the Ministry of Finance, by November 25, 2022, the pre-maturity repurchase volume of enterprises is VND161 trillion, equal to 114% of the repurchase volume in 2021.

Talking about market confidence, Deputy Minister Nguyen Duc Chi said that the assessments showed that the market's confidence decreased, greatly affecting the corporate bond market.

Therefore, the Deputy Minister has specifically analyzed a number of reasons. First, there are a number of violations from the issuer to the commercial bank that we must consider and handle. These violations have affected the confidence of the market, the trust of investors, consulting firms and the issuers themselves.

The second is caused by the influence of inaccurate rumors. At a recent Government press conference, Deputy Minister Nguyen Duc Chi said that he had also reported this issue and asked the Ministry of Public Security and the press for help. Immediately after that, the Ministry of Public Security handled a number of cases, and the press also contributed a lot to limit ing false rumors that affected the market's confidence.

Moreover, the issuers are facing difficulties in liquidity, cash flow and credit. The real estate market is also difficult, and real estate businesses are also facing difficulties in issuing bonds.

"These difficulties have affected the market,” the Deputy Minister of Finance stated.

Protect the legitimate interests of investors

Talking about solutions to stabilize and develop, and ensure the legitimate interests of investors, Deputy Minister Nguyen Duc Chi said that the Ministry of Finance has identified several groups of reasons and solutions.

In particular, regarding the legal framework, the Government, after reviewing and evaluating, issued Decree 65 amending and supplementing a number of contents of Decree 153 on transactions and private placement of corporate bonds. The Deputy Minister assessed that the issuance of Decree 65/2022 has promptly enhanced the publicity and transparency of the market, dealt with inadequacies as well as protected the interests of investors.

However, the market situation has changed extremely rapidly in recent months, so the Prime Minister has very clearly directed to review immediately, including Decree 65 recently issued, to proceed immediately with amendments and supplements to help the market.

Therefore, implementing this direction, the Deputy Minister of Finance said that the Ministry is urgently submitting to the Government and the Prime Minister legal issues related to Decree 65 and related regulations, in its competence, to consider and settle in December.

In actual implementation, on November 23, the Minister of Finance held a face-to-face meeting with 37 companies issuing individual corporate bonds, having large issuance scale and issuance volume, with expiry period in the last 2 months of 2022 and 2023.

Along with that, there are nearly 10 securities companies with a large market share of government bond issuance.

Thereby, the Ministry of Finance listened to the recommendations and proposals of businesses as well as consulting companies. Some recommendations focus on encouraging early restoration of confidence in the market; removing difficulties in liquidity and credit of enterprises from credit institutions; and completing the legal framework.

Therefore, the Ministry of Finance has sent a document to all bond issuers and requested that businesses must prioritize using all their resources to fulfill their commitments to investors. In case there are difficulties in paying the bond principal and interest, it is necessary to have a plan to reach an agreement with investors.

"Enterprises must be proactive and responsible by all means, at all costs, to the best of their ability with investors," Deputy Minister Nguyen Duc Chi emphasized.

In addition, the Ministry of Finance recommends that enterprises must comply with the information disclosure regime as prescribed, and proactively provide information about enterprises to investors. Enterprises can hire consulting firms, including independent audit, credit rating, valuation, etc to determine the value of the business, helping investors understand the current situation of the business. If any business violates the law, state management agencies will strictly handle it, helping to protect the legitimate interests of investors in any circumstances as the Prime Minister said in the media conference.

Along with the above tasks, the representative of the leadership of the Ministry of Finance said that they will implement other solutions related to the relevant agencies of the Government such as the State Bank, the Ministry of Construction, and the Ministry of Information and Communications.

“In order to ensure the best interests of investors, issuers must fulfill their obligations. To do that, it is necessary to implement solutions to bring the bond market back to normal operation. At that time, both the interests of businesses and investors will be fully and seriously implemented, and we will have a market that continues to be stable and develop safely," said the Deputy Minister of Finance.

Also on this issue, Minister and Chairman of the Government Office Tran Van Son emphasized legal solutions and amendments to the law on securities business, enterprises, to encourage the development of investing corporate bonds more professionally.