Investors must understand the law before investing in corporate bonds.

Mr. Nguyen Hoang Duong, Deputy Director of the Department of Banking and Finance ( Ministry of Finance ) said that in order to develop a safe and healthy market and strengthen investor confidence, each participant in the market must comply with the provisions of the law.

Corporate bond market slowly recovers, what should investors pay attention to? Image 1 — Mr. Nguyen Hoang Duong, Deputy Director of the Department of Finance of Banks and Financial Institutions. (Photo: TCTC)

How do you evaluate the corporate bond market at the present time?

- With the synchronous implementation of solutions to stabilize the market under the direction of the Government and Government Leaders, since the second quarter of 2023, the corporate bond market situation has shown signs of improvement, with issuance volume increasing.

In the first 10 months of the year, 70 enterprises issued bonds with a volume of VND 180.4 trillion; the volume of early repurchase was VND 190.7 trillion (up 30.2% over the same period in 2022).

Since Decree 08/2023/ND-CP took effect, the issuance volume was VND 179.5 trillion. In October 2023, the issuance volume was VND 41 trillion, an increase of VND 17 trillion compared to September.

Since the beginning of the year, businesses have bought back 190.7 trillion VND worth of bonds before maturity (higher than the total issued amount). In October 2023 alone, businesses bought back about 14.2 trillion VND.

I believe that the positive recovery of the corporate bond market is a result of both the Government's drastic policies and the transformation of market participants.

Faced with a number of violations of the law related to corporate bond issuance that have caused instability in the corporate bond market as we know, the Government leaders have issued many directives to stabilize the macro economy , flexibly manage fiscal and monetary policies, support businesses to restore production and business activities, and have cash flow to pay debts in general and corporate bond debts in particular.

Regarding other entities participating in the corporate bond market, after the policies were issued synchronously, the propaganda work on the corporate bond market was continued to be strengthened by the Ministry of Finance, the awareness and sense of law compliance of both issuing enterprises and service providers changed dramatically, they understood their responsibilities and obligations when participating in the market better. This is a factor that helps the market to be transparent and develop sustainably.

Do you have any advice for investors entering the market at the present time, sir?

- In recent times, the Ministry of Finance has regularly carried out propaganda work on corporate bonds, warned about market risks, and recommended that investors assess risks when deciding to invest. The Ministry of Finance will strengthen propaganda, training and dissemination of laws.

We recommend that investors should note that they must be professional securities investors to be able to buy individual corporate bonds and, more importantly, investors need to have a full understanding of legal regulations.

Investors need to have full access to information about the issuing enterprise and the bond, carefully evaluate the financial situation of the issuing enterprise, be cautious with consulting services, clearly distinguish corporate bond products from bank deposits, assess the level of risk commensurate with the profit when investing in bonds and take responsibility for their investment decisions.

Investors also need to note that the risks of bonds are risks associated with the bond-issuing enterprise, not risks related to the bond distribution organization, including commercial banks distributing bonds.

In addition, in order to support the liquidity of the corporate bond market, enhance the transparency of the secondary market, the repurchase of corporate bonds and serve the monitoring and supervision of information by State management agencies, the individual corporate bond trading system at the Hanoi Stock Exchange has also been put into operation.

Investors note that only professional securities investors are allowed to trade on the private TPDN trading system.

Before purchasing bonds, investors must sign a commitment to have full access to information about the bonds, and service providers or bond sellers must also confirm that they have provided all necessary documents to investors.

Corporate bond market slowly recovers, what should investors pay attention to? Image 2 — Investors must understand the law before investing in corporate bonds. (Photo: TP)

Could you please tell us, in the role of a specialized management agency, what will the Ministry of Finance do in the coming time to stabilize and develop a safe and healthy corporate bond market, truly becoming an effective capital channel?

- It can be seen that the simultaneous implementation of solutions on policy mechanisms, market management and strict handling of violations in corporate bond issuance by authorities in recent times has gradually stabilized the market and increased investor confidence.

In the coming time, the Ministry of Finance will coordinate with relevant ministries and branches to continue implementing solutions to stabilize and develop the corporate bond market in a public, transparent, safe and sustainable manner to unlock medium and long-term capital sources for investment and development, focusing on the following groups of solutions:

The Ministry of Finance will continue to closely coordinate with the State Bank, the Ministry of Planning and Investment and relevant ministries and branches to implement fiscal policy, monetary policy and other macroeconomic policies to maintain macroeconomic stability, ensure major balances of the economy, stabilize the investment environment, ensure consistency and policy stability so that investors can confidently participate in activities and investments in the market.

The Ministry of Finance will synchronously deploy solutions to perfect policies towards strengthening management and supervision of the corporate bond market, improving the quality of goods, improving the quality of service providers; deploying solutions to promote the issuance of corporate bonds to the public for qualified enterprises in addition to the private issuance channel to diversify investors.

In addition, it is necessary to develop the investor base through reviewing and perfecting the policy mechanism for developing professional investors and long-term investors (investment funds) to create sustainable investment demand for the market.

The Ministry of Finance continues to monitor and require businesses to allocate all resources to pay the principal and interest of bonds due in accordance with the law, protecting the rights of investors. Businesses that have difficulty in payment must work and negotiate with investors to agree on a bond restructuring plan.

The Ministry of Finance will also continue to strengthen communication work to stabilize psychology, rebuild investor confidence, and help businesses and investors feel secure in mobilizing and investing in the capital market.

Regarding inspection and supervision activities, the Ministry of Finance will continue to direct the State Securities Commission and relevant agencies to organize focused and key inspections at issuing enterprises and service providers to improve the quality of issuance by issuing enterprises, the quality of service provision in the corporate bond market, and strengthen investor confidence. After the inspection, any violations, if any, will be widely publicized to the market.

However, as I mentioned above, the sustainable development of the corporate bond market requires the joint efforts not only from the drastic policies of State management agencies but also depends on the awareness and sense of law compliance of market participants.

Thank you!

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