The rate of successful bond debt extension negotiations increased from 16% to 63%
Mr. Nguyen Hoang Duong, Deputy Director of the Department of Finance of Banks and Financial Institutions, Ministry of Finance said: Since the incidents in the financial market at the end of last year, along with the negative developments in the domestic and foreign financial markets, the corporate bond market has been severely affected, investors have lost confidence, businesses are under pressure to buy back issued bonds as well as not being able to issue new bonds to mobilize capital for production and business.
Mr. Nguyen Hoang Duong, Deputy Director of the Department of Finance of Banks and Financial Institutions, Ministry of Finance. (Photo: TC)
In that context, the Government and the Prime Minister have had many directives related to this market, from perfecting the legal framework to maintaining macroeconomic stability, improving the production and business environment as well as markets related to the bond market such as the real estate market, the credit market, and implementing the State's supportive fiscal policies.
Among those policies, we see the Government promptly and promptly issuing Decree 08, including the policy of postponing the implementation of some provisions of Decree 65 as well as the policy allowing businesses and investors to have mechanisms to negotiate, extend, postpone and exchange issued bonds in the spirit of sharing risks and harmonizing benefits among the parties.
According to Mr. Duong, after the Government issued Decree 08, the market has shown more positive signs, businesses have returned to issuing bonds, in the first quarter there were almost no issuances, from the second quarter onwards, the issuance volume of each month is higher than the previous month. By the end of November, there were 77 businesses issuing a volume of about 220,000 billion VND.
Second, based on the provisions of Decree 08, enterprises and bondholder investors have made great efforts to negotiate payment of maturing bonds.
“We have monitored that about 40% of the overdue bond volume of 68 enterprises has now had a negotiation plan, the successful negotiation rate increased from 16% in February 2023 to 63% in October 2023,” said Mr. Duong.
In addition, businesses that have arranged financial resources have proactively bought back bonds before maturity.
Mr. Duong revealed that at a recent meeting between the Ministry of Finance and associations and market members, market members highly appreciated the policies of Decree 08, which are both timely and create a framework for investors and businesses to negotiate, creating conditions for businesses to have more time to restructure current debts.
Waiting for positive signals in 2024
Meanwhile, Ms. Nguyen Ngoc Anh, General Director of SSI Fund Management Company, said: Since the end of 2022, all bond market members have a common concern about what will happen next in 2023.
The difficulties of the corporate bond market have passed. (Photo: DMI)
“Up to this point, I and all of you here can say that there has been a “soft landing” for this incident,” said Ms. Ngoc Anh.
First, the Ministry of Finance has resolutely issued Decree 08 to provide a legal basis for the parties to negotiate and extend the extension. Second, the launch of the secondary private bond market in an unprecedentedly fast time has also greatly supported the rebuilding of investor and market confidence.
There are two things here for centralized private placement operations. First, market liquidity is very important, and second, transparency.
In the past, secondary investors could only access information through the distribution system and sales brokers, and the information was transmitted incompletely.
Now through the centralized bond market, investors have complete rights and access to all the information they want to access.
This will reduce the risk that distribution systems will make excessive offers or promise that these are risk-free products.
“I think that the operation of this private bond market plays a very important role in bringing transparency to the market, especially for individual investors,” said Ms. Ngoc Anh.
Second is the liquidity of the market, if before investors did not have a market to trade, buy and sell, now they have an electronic trading market to trade with very clear terms, conditions and commitments in Appendix 05, also making investors improve their understanding and increase their responsibility in any transaction. That is the same for all consulting parties related to market building and market creation.
“I think that the end of 2023 is also the time when we all see that a very difficult year has passed and this is really an opportunity, a premise for 2024 to have outstanding growth in this market,” Ms. Ngoc Anh emphasized.
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