Consider raising issuance conditions for individual corporate bonds

Considering raising issuance conditions is one of the solutions mentioned to minimize newly established enterprises that have no operations or are established but have no operations, issuing with a scale many times larger than the owner's equity.

Mr. Nguyen Duy Thinh, Chairman of Hanoi Stock Exchange (HNX) delivered the opening speech.

Nearly 832,200 billion VND of bonds on the secondary market, newly mobilized last year nearly 394,000 billion VND

Sharing at the Conference summarizing 1 year of operating the Private Corporate Bond Trading System (July 19, 2023 - July 19, 2024), Mr. Nguyen Duy Thinh, Chairman of HNX said that building and developing the stock market in general and the corporate bond market (TPDN) in particular is a major, consistent and correct policy of the Party, State and Government. In particular, the TPDN market is assessed to play an important role in the economy, being an effective capital mobilization channel in the medium and long term for the sustainable development of enterprises, while contributing to diversifying the financial market, ensuring harmony and balance in the capital market structure...

Under the close and drastic direction of the leaders of the Ministry of Finance, the State Securities Commission, and the active and effective coordination of VSDC, Vietcombank, and member units, on July 19, 2023, the centralized trading system for individual corporate bonds was officially launched at HNX after 9 months of preparation.

According to Mr. Nguyen Duy Thinh, despite the short preparation time, the individual corporate bond trading system has been launched and operated in accordance with the regulations of Decree 65/2022/ND-CP and the direction of the Ministry of Finance's leaders. After one year of operation, the individual corporate bond trading system has been operated safely and smoothly, the scale of the individual corporate bond trading market has grown strongly, along with the improvement of the situation of individual corporate bond issuance in the primary market.

“In the spirit of always being open-minded, continuing to build and further improve the individual corporate bond market, we believe that, with the direction and support of the leaders of the Ministry of Finance, the efforts of the State Securities Commission , HNX, VSDC, Vietcombank, member units, issuing organizations... the individual corporate bond market will increasingly develop more stably, safely, and sustainably, effectively promoting its role as a medium and long-term capital mobilization channel for businesses in particular and the economy in general,” the Chairman of HNX shared.

HNX representative, Ms. Vu Thi Thuy Nga, Deputy General Director of HNX said that at the time of opening, the market had 19 individual corporate bond codes of 3 issuing organizations registered for trading with a total registered trading value of VND9,060 billion. After one year, the application was received and put into trading on the individual corporate bond trading system 1,146 bond codes of 301 enterprises with a registered trading value of nearly VND832,189.4 billion. The individual corporate bond trading member system also developed rapidly from 8 members at the market opening day, to date, the system has 48 members.

In particular, the liquidity of individual corporate bonds has improved significantly, with the average transaction value in the first month of the market opening reaching VND250.6 billion/session. After 1 year, the average transaction value of individual corporate bonds reached VND3,704.5 billion/session, mainly focusing on investors such as credit institutions (38.3%) and securities companies (nearly 32%).

On the other hand, the development of the secondary market for individual corporate bonds also creates favorable conditions for enterprises to mobilize capital in the primary market, contributing to promoting the development of the primary market for individual corporate bonds in a healthier and more sustainable manner. In the domestic market, from July 19, 2023 to July 19, 2024, there were 167 successful issuances with a value of VND 393,892.6 billion.

Also at the Conference, data from the report of Mr. Duong Ngoc Tuan, Deputy General Director of VSDC showed that, as of the end of September, the number of investor accounts was 190,826, including 190,034 individual investor accounts. The payment value was over 3,000 billion VND/day, of which, on June 11, 2024, the largest payment value was over 10,400 VND. In the first year of operation, VSDC registered for the first time more than 1.47 billion bonds, equivalent to nearly 900,000 billion VND; exercised the rights of 1,400 codes/bond batch, equivalent to nearly 96,500 billion VND.

In general, although the number of applications for first-time registration and exercise of individual bond rights was large at the beginning of the implementation, VSDC processed these applications within the prescribed time. The sharp increase in the number of members and investor accounts participating in VSDC's individual bond system contributed to the increase in the number, transaction value and payment value of individual bonds.

As the payment bank, representative of the designated payment bank, Mr. Vu Quang Dong, Deputy Director of Vietcombank's Capital Market Division, shared that over the past year, Vietcombank's individual corporate bond transaction payment system has contributed to the overall success of the individual corporate bond secondary market with payments made instantly for each transaction, managing the balance of money for buying/selling bonds to each investor.

"Consider raising issuance conditions; promote standardization of conditions and model terms for individual corporate bonds"

Ms. Vu Thi Chan Phuong, Chairwoman of the State Securities Commission, gave a speech at the Conference.

Appreciating the results achieved after one year of officially operating the individual corporate bond trading system, Chairwoman of the State Securities Commission Vu Thi Chan Phuong said that this is the result of the close combination of the Government's correct policy, the close direction of the Ministry of Finance, the implementation efforts of HNX, VSDC, the active participation of Vietcombank in the role of payment bank, as well as the response and participation of market members. This is also a common achievement of many groups, units and individuals, for the goal of building and developing a stable, safe, transparent and sustainable individual corporate bond market.

Ms. Chan Phuong said that management agencies and units, as well as market members and issuing organizations, need to continue researching to come up with solutions to overcome existing problems, bringing the corporate bond market in general and individual corporate bonds in particular to develop with more quality, efficiency, transparency and sustainability; contributing more clearly in the role of a medium and long-term capital mobilization channel for businesses and the economy.

“I believe that the private corporate bond market has been, is and will become one of the capital mobilization channels for businesses, along with bank credit channels, public securities issuance channels and other capital mobilization channels,” Ms. Phuong emphasized.

With the desire to join hands with agencies, organizations, and market members in building an increasingly sustainable private corporate bond market, contributing to the development of enterprises in particular and the financial market in general, at the Conference, the Chairman of the State Securities Commission requested units to research and implement a number of solutions.

Specifically, continue to improve the quality of goods on the market by improving the quality of issuing organizations. There are basic solutions to control the quality of individual corporate bonds by promoting the application of credit ratings for issuing organizations; consider raising the conditions for issuing individual corporate bonds to minimize the possibility that many newly established enterprises that have not yet operated or have been established but have not operated can issue individual corporate bonds with a scale many times larger than their equity.

Second, continue to improve the quality of investors by attracting professional investors in the financial sector, financial investors, and foreign institutional investors.

Third, close coordination between policy-making agencies, supervisory organizations, and market members in proposing solutions and initiatives to promote sustainable and healthy market development, and resolve difficulties, problems, and obstacles in market operations.

Fourth, consider promoting standardization, researching, developing and applying a set of standard conditions and model terms for corporate bonds, referring to international experience and practices to address the current situation of bonds with many different conditions and terms.

Fifth, research encourages the development of an ecosystem for the market through the development and improvement of the quality of service providers and market intermediaries such as consulting organizations, guarantee organizations, credit enhancement organizations, etc.

Finally, strengthen communication on activities, operations and regulations in the individual corporate bond market so that businesses and investors can improve their understanding of rights, obligations and responsibilities in complying with the law and fulfilling obligations as prescribed.

Source: https://baodautu.vn/xem-xet-nang-dieu-kien-phat-hanh-doi-voi-trai-phieu-doanh-nghiep-rieng-le-d222755.html