Corporate bond market "thirsty" for big players

Corporate bonds are an important medium- and long-term capital mobilization channel for businesses. Photo: Duc Thanh

New non-bank institutional investors hold 10-15% of corporate bonds

Mr. Le Hong Khang, Director of Analysis at FiinRatings, said that in 2025, the capital mobilization demand of enterprises and the economy will be very large. Corporate bonds are an important medium and long-term capital mobilization channel for enterprises, but have not attracted a variety of institutional investors.

“Currently, Vietnam’s corporate bond market relies mainly on commercial banks, while lacking the participation of pension funds, insurance companies and mutual funds – important investor groups in developed markets,” said Mr. Khang.

In fact, since last year, commercial banks have almost dominated the entire corporate bond market in both the role of seller and buyer. The active participation of banks has increased the size of this market, but the fact that banks are “alone in the market” shows that the depth of the market needs to be improved.

According to FiinRatings, in developed countries, the participation of institutional investors who are not financial institutions is very large, accounting for 40-50% of the corporate bond market, but in Vietnam, this figure is only 10-15%. Although life insurance funds, non-life insurance funds, pension funds... in our country are holding up to 90 billion USD in total assets, the amount of capital participating in the corporate bond market is still low.

Many domestic and foreign investment funds also believe that the depth of Vietnam's corporate bond market will only improve when there is a mechanism to attract this capital flow.

“Currently, the number of individual investors holding corporate bonds accounts for a large proportion, while institutional investors hold a small proportion, creating an imbalance. In particular, a very important segment of the market, insurance funds, has not been promoted. Even the investment fund of TCBS Securities Company is facing difficulties when investing in corporate bonds due to lack of supply, we can only invest in listed bonds,” said Mr. Nguyen Tuan Cuong, Deputy General Director of TCBS Company.

The market will be more diverse in terms of bond types and investors.

Regarding the diversification of products and investor base in the bond market, the representative of the State Securities Commission said that issuers need to have more new products to attract investors, especially green bonds and listed bonds. In addition, domestic investment funds also need to cooperate more with foreign investment funds to participate in the bond market.

Recently, the management agency has introduced many solutions to increase transparency in the corporate bond market, remove barriers to market participation for investment funds, and research policies for new investment fund models...

Corporate bond issuance in February 2025 was almost frozen due to no issuance. However, experts said that there are 3 reasons why corporate bond issuance in 2025 will still grow positively.

Firstly, credit institutions increased bond issuance to increase medium- and long-term capital to meet the high credit growth demand in 2025 - expected at 16%, while complying with the State Bank's safety ratios. Real estate recovery and the Government's promotion of policies to implement the Power Plan VIII have made the issuance of real estate bonds and renewable energy bonds vibrant again.

Second, the market has recently seen a number of multi-industry enterprises issue long-term bonds, bonds with independent credit ratings, and guaranteed by international organizations. This shows that investor confidence will return if bonds are more transparent.

Third, public bond issuance will improve thanks to new regulations on issuance conditions and credit rating requirements.

Mr. Nguyen Quang Thuan, Chairman of FiinRatings, said that the new regulations on private and public issuance of corporate bonds coming into effect will help improve the quality and depth of the corporate bond market, turning corporate bonds into a medium and long-term capital mobilization channel for businesses.

Continue to improve the quality of market support tools.

- Mr. Le Hong Khang, Director of Analysis at FiinRatings

In order for the corporate bond market to truly play its role as an effective capital mobilization channel for the economy, Vietnam needs to continue to promote reforms, expand the investor base and improve the quality of market support tools. Currently, bond pricing tools, yield curves and credit ratings are not fully developed, causing the market to lack transparency in risk information, limiting the accessibility of large investors. This makes it difficult for businesses to mobilize capital due to a lack of investors, and investors do not dare to invest due to a lack of tools to assess and manage risks.

Source: https://archive.vietnam.vn/thi-truong-trai-phieu-doanh-nghiep-khat-tay-choi-lon/