Bond investors need more “menu” to choose from

Mr. Phung Xuan Minh, Chairman of the Board of Directors of Saigon Ratings (the first domestic independent credit rating organization licensed by the Ministry of Finance) said that bond-issuing enterprises must have relatively high credit quality so that investors can assess the value of the bonds and have more "menu" to choose from.

Mr. Phung Xuan Minh, Chairman of the Board of Directors of Saigon Ratings (the first domestic independent credit rating organization licensed by the Ministry of Finance) said that bond-issuing enterprises must have relatively high credit quality so that investors can assess the value of the bonds and have more "menu" to choose from.

Mr. Phung Xuan Minh, Chairman of Saigon Ratings Board of Directors

How do you see the bond market's developments in 2024?

Comparing the issuance volume in 2024 with 2022-2023, it can be seen that the market has not really changed. However, there have been more positive signals when issuing enterprises tend to pay more attention and start mobilizing new capital sources to restructure enterprises, implement projects to remove difficulties, repay debts, etc.

Another sign different from previous years is that the number of enterprises issuing bonds to the public market has increased somewhat compared to private issuance. In addition, enterprises are planning to continue to evaluate ratings to prepare for capital mobilization in the first and second quarters of 2025.

With the above signs, I believe that the most difficult time for bonds has passed, the market has gradually recovered and stabilized, but not clearly, not really sustainable.

What do you think the pressure on the bond market will be like in 2025?

According to our data, the maturity pressure in 2025 is still relatively high, equivalent to 2024 and continues to be high in the period 2026 - 2027. In 2024, many businesses have successfully extended the bond principal and interest payment period, pushing the pressure to 2025 - 2026. This number, together with the previous maturity value, makes this period face no small pressure on bond maturity.

The bond market today has three main problems.

The first is market confidence. Through the policies of the management agency, the sanctions for handling violations of recent scandals also contribute to strengthening investor confidence.

The second is the quality of the issuer. In fact, the issuers are trying to recover, but their ability to overcome difficulties is not really strong, and they are still in the "healing" stage to maintain their existence.

Third is the quality of information provided to the market. According to the law, only a few entities that must be rated can be released, causing a lot of information to be unclear and not provided objectively to the market. The rate of credit ratings required in the market is not high compared to the actual number released to the market.

How will the new regulations related to bonds of the amended Securities Law affect supply and demand in the corporate bond market in 2025?

The revised Securities Law, when it comes into effect, must also take into account the delay of the policy when it permeates the market. Therefore, the supply and demand trends in the market need more time to form more clearly. However, I also have expectations for this new policy from many perspectives.

The first is to increase the safety factor for investors by using collateral or bank guarantees or collateral with credit ratings. According to international practice, this is a matter of information transparency, along with which investors can decide their own risk appetite.

Second, the quality of investors and issuers has been gradually improved. In the world, most businesses with a rating of level 4 or higher have successfully issued bonds. In Vietnam, up to now, the race for interest rates has been mainly focused on, while the risk factor has been overlooked. Issuing businesses must have a relatively high credit quality so that investors can assess the value of the bonds, reduce risks, and have many "menus" to choose from.

Third is the awareness of investors that participating organizations are members of the market and will work together to improve the quality of the market.

In the stock market, many analysts have given their expectations for industries with good growth potential in 2025, including real estate. Will the prospects of those industries spill over well into the bond market?

The real estate market has shown signs of recovery, and segments are gradually heating up. With the pressure of public investment disbursement, real estate services and infrastructure construction sectors are also developing again and gradually needing to mobilize capital. I expect that the economic recovery will impact the real estate and construction sectors.

I have particular faith in technology-related businesses. Although the issuance rate of this group of businesses in the market is still very small, looking to the future, with the speed of digital transformation, the prospect of leading technology corporations such as NVIDIA coming to Vietnam and promoting policies, the technology industry will be further promoted. Along with that is the need for capital for businesses to participate in new technology industries.

Furthermore, when the economy develops, production and business related to export will have positive progress, processed goods, import and export, seaports or other fields also have the need to issue bonds to prepare funds.

Source: https://baodautu.vn/nha-dau-tu-trai-phieu-can-them-menu-de-lua-chon-d238976.html