DNVN - FiinRatings assessed that restricting individual investors from participating in individual corporate bonds is a reasonable policy, due to the high risk level of this product. However, to avoid capital flow blockage, it is necessary to promptly review the restrictions on investment in corporate bonds by institutional investors.
The policy of restricting individual investors is reasonable.
Experts predict that corporate bond issuance will be more active in the fourth quarter due to the recovery in capital demand from businesses in the context of the real estate market starting to warm up and the need to expand production and business following the economic recovery.
Meanwhile, from a legal perspective, the Draft Law amending the Law on Securities amends many important regulations related to individual corporate bonds; bonds issued to the public such as: amending regulations on professional individual investors, planning to prohibit individuals from investing in individual corporate bonds, and adding regulations that corporate bonds issued to the public must have collateral.
The draft is being drafted by the Ministry of Finance; it is expected to be discussed at the 8th Session of the 15th National Assembly taking place from October 21 to November 30.
The draft Law amending the amended Securities Law proposes that individual investors do not participate in the private corporate bond market, except for bonds issued by credit institutions.
Regarding the issue of restricting individual investors, Article 11 of the draft stipulates: Professional securities investors participating in the purchase, trading, and transfer of individual corporate bonds are organizations, except for individual corporate bonds issued by credit institutions.
Accordingly, the Draft Law proposes that individual investors do not participate in the private corporate bond market, except for bonds issued by credit institutions.
Discussing the policy of restricting individual investors, credit rating company FiinRatings assessed that the current restriction of individual investors' participation in the private bond market is a reasonable policy, because private bonds are inherently not highly standardized and are largely based on negotiation and agreement. Institutional investors are financial institutions that are better able to handle risks from private corporate bonds.
Citing practices in some Asian countries, FiinRatings said that in China, individual investors hardly participate in direct ownership of corporate bonds. Instead, they invest through entrustment and purchase fund certificates managed by fund management companies.
In addition, in Thailand, the participation rate of individual investors is high due to the application of the definition of "High-net-worth investors" (with net assets of 30 million baht, equivalent to about 22 billion VND or more; annual income of at least 2.2 billion VND) or a total securities portfolio of 8 million baht, equivalent to about 6 billion VND).
"To limit the participation of professional individual investors, Vietnam should soon review the investment restrictions and asset allocation into corporate bonds of institutional investors (insurance companies, investment funds, pension funds, etc.) to open up opportunities for these investors to participate in the market more. In addition, promote bond credit ratings to support institutional investors in allocating assets according to risk," FiinRatings suggested.
Foreign investors should be encouraged.
Regarding the provisions in Article 11 on supplementing professional securities investors including foreign institutional and individual investors, FiinRatings believes that the participation of foreign investors in the Vietnamese private bond market is still limited.
By the end of 2023, foreign investors' holdings of corporate bonds will be only about 3% of the total value of outstanding bonds. Foreign investors mainly invest in bonds of large enterprises. Meanwhile, Vietnamese enterprises are in great need of long-term capital in the context of Vietnam's efforts to upgrade to "emerging market" status to attract foreign capital flows.
"The potential for expanding the scale of Vietnam's corporate bond market from foreign capital is huge. Foreign investors often have investment experience, qualifications, financial capacity and high risk tolerance. Foreign investment funds have much larger resources and scale than domestic organizations. Therefore, with the huge potential of Vietnam's debt capital market, encouraging foreign investors to participate in the market is necessary," FiinRatings emphasized.
To enhance the confidence of foreign investors to encourage participation in the Vietnamese corporate bond market, FiinRatings recommends that, in addition to the policy of recognizing foreign investors as professional securities investors, it is necessary to improve market transparency and the quality of information disclosure. This includes promoting the application of credit ratings, developing databases on yield curves and late payment history, etc. Thereby creating conditions for investors to access information and price bonds conveniently and effectively.
According to the new bond issuance plan updated on October 9, 2024 by FiinProX, a number of businesses have announced upcoming issuances. Specifically, Bac A Bank plans to issue VND1,800 billion for three bonds with terms of 7 and 8 years on October 28, 2024. Ban Viet Bank (BVBank) plans to issue VND700 billion on October 31, 2024, while BIDV will issue VND3,000 billion on October 30, 2024. HDBank and DIC Corp both plan to issue VND1,000 billion and VND2,100 billion on December 31, 2024. TNG Investment and Trading Company also plans to issue VND400 billion by the end of the year. In addition, BVBank also plans to issue an additional VND2,800 billion in 2025, with three tranches on January 31, September 30, and November 30. Vietravel Tourism Company also plans to issue VND500 billion on December 31, 2025. Forecasts show that banks will need to mobilize a large amount of bonds to increase Tier 2 capital. In addition to the banks that have announced issuance plans, many other banks such as Vietinbank (VND 8,000 billion), LPBank (VND 6,000 billion), SHB (VND 5,000 billion) and MBBank (VND 3,000 billion) are also expected to participate in the remaining months of 2024. |
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Source: https://doanhnghiepvn.vn/kinh-te/fiinratings-that-chat-ca-nhan-tham-gia-trai-phieu-doanh-nghiep-la-hop-ly/20241022022258942
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