Auditing is the past, credit ratings are the future
Sharing at the Workshop "Developing the corporate bond market towards professionalism and sustainability" on the morning of August 16, Mr. Nguyen Quang Thuan - General Director of FiinRatings said that although a credit rating culture has been gradually formed in Vietnam, this is still a new concept and credit rating has not been properly assessed in the Vietnamese market.
In particular, many investors and businesses still hold the notion that credit ratings are paid for by businesses, so some conclusions may not be objective.
Mr. Nguyen Quang Thuan – General Director of FiinRatings.
FiinRatings CEO said that the credit rating industry in the world has been around for more than 100 years and if Vietnamese enterprises want to mobilize capital from international channels, they are required to have a credit rating. There are no regulations but it has been a practice in the world market for more than 100 years.
"Credit rating is not a business of selling awards. Auditing is the past, credit rating is the future," Mr. Thuan affirmed.
Mr. Thuan said that currently there are many pension funds and mutual funds interested in the Vietnamese bond market but cannot invest due to credit rating requirements.
Therefore, FiinRatings representative believes that in order to develop and attract investors, especially institutional investors, the main infrastructure (policies, legal framework, transparency) is important, but the soft infrastructure (trading on the listed floor) must follow international practices.
At the same time, the expert expressed his expectation that the future prospects of the credit rating industry will come from policies, the intrinsic needs of businesses, the wishes of consulting units, and pressure from investors.
Deputy Director of the Securities Market Development Department of the State Securities Commission To Tran Hoa said that some enterprises issuing bonds have revealed unstable financial situations and lack of transparency in information, leading to the risk of not being able to repay debts when due, causing losses to investors.
"Incidents of corporate defaults or late interest payments have reduced investor confidence in the market. Although there have been signs of improvement, market growth is still slow, many businesses are still facing difficulties in cash flow and production and business, so the situation of late payment of principal and interest on bonds still occurs," said Mr. Hoa.
Meanwhile, in the market, the proportion of individual investors is still high, while institutional investors are not yet diverse.
Along with that, the low liquidity of some corporate bonds makes it difficult for investors to sell bonds before maturity to recover capital, reducing the attractiveness of this channel, especially for institutional investors.
In particular, there is a lack of reputable, independent intermediary organizations participating in the process of rating corporate credit and pricing corporate bonds. In addition, the low liquidity of some corporate bonds makes it difficult for investors to sell bonds before maturity to recover capital.
Bond market gradually warms up
Sharing at the Workshop "Developing the corporate bond market towards professionalism and sustainability" on the morning of August 16, Mr. Hoang Van Thu - Vice Chairman of the State Securities Commission (SSC) said that after a period of stagnation and some violations in the individual corporate bond market, with efforts from the Government, ministries, and state management agencies, the bond market has been operating stably.
In the first 7 months of the year, there were 183 successful issuances, with a total mobilized value of VND 174,000 billion, an increase of 2.78 times compared to 2023.
Regarding public bond issuance activities, in 7 months, the State Securities Commission has licensed and issued nearly 30,000 billion VND worth of bonds (not including bond figures of securities companies and fund management companies).
Mr. Hoang Van Thu - Vice Chairman of the State Securities Commission.
According to the bond market development target approved by the Government, the market size will reach 20% of GDP by 2025 and 30% of GDP by 2030.
To achieve the above goal, the representative of the State Securities Commission said that this management agency has developed a market development strategy and has been approved by the Government. "Achieving this goal is not easy," Mr. Thu emphasized.
Analyzing further, the leader of the State Securities Commission said that to strictly manage in a sustainable direction while still creating conditions for economic organizations to mobilize capital is a difficult problem.
In addition to the management agency, the subjects participating in the bond market also include issuers, service providers, consultants and investors. According to Mr. Thu, each of these subjects needs to be professionally enhanced.
In particular, the Vice Chairman of the State Securities Commission said that management agencies are in the process of amending and perfecting many laws.
Some contents include enhancing credit ratings in issuance operations; increasing the presence of consulting units in the process of preparing and evaluating documents instead of being implemented by management agencies; enhancing the self-responsibility of participating entities such as consulting units and credit ratings.
"These solutions help reduce the time for management agencies to evaluate documents. At the same time, the issuer itself must have a project and investment goals to have a bond maturity date, ensuring interest and principal payments.
In the story of violations occurring in the market, they all fall into the group of investors with limited opportunities to assess risks. Therefore, according to the orientation of the State Securities Commission, it is studying the subjects of issuing individual bonds aimed at professional institutional investors to enhance professionalism and assess risks," Mr. Thu stated.
Source: https://www.nguoiduatin.vn/ceo-fiinratings-xep-hang-tin-nhiem-trai-phieu-khong-phai-kinh-doanh-buon-ban-giai-thuong-204240816122133811.htm
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