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The bond market has shown positive signs, and confidence has returned

After the Government issued Decree 08, the bond market showed more positive signs, and businesses returned to issuing bonds.

Deputy Director of the Department of Finance of Banks and other Financial Institutions (Ministry of Finance) Nguyen Hoang Duong stated on December 4 at the Seminar: "Promoting the Development of an Effective, Safe, and Sustainable Corporate Bond Market" organized by the Government Electronic Information Portal that since the incidents in the financial market in October 2022, along with bad developments in the domestic and foreign financial markets, the corporate bond market has suffered. Investors lost confidence, businesses were pressured to buy back issued bonds and could not issue new bonds to mobilize capital for production and business.

In that context, the Government and the Prime Minister have given many drastic instructions in areas 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, credit market, and implement supportive fiscal policies of the State.

Among these policies is the Government's urgent and timely promulgation of Decree 08, which includes the policy of postponing the implementation of some provisions of Decree 65, as well as the policy of providing mechanisms for businesses and investors to negotiate, relax, postpone, and exchange issued bonds in the spirit of shared risks and harmonious benefits between parties.

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, next month's issuance volumes were all higher than last month's. By the end of November, 77 enterprises were issuing a volume of about 220,000 billion VND.

Second, by the stipulations of Decree 08, enterprises and bondholders have made significant efforts to negotiate the settlement of past-due debts. About 40% of the volume of deferred bonds of 68 businesses now have a negotiation plan. The successful negotiation rate increased from 16% in February 2023 to 63% in October 2023.

Also read: Bad debt on the rise » Vietnam News - Latest Updates and World Insights | Vietreader.com

In addition, businesses that have arranged financial resources have proactively bought back bonds before maturity.

Along with that, implementing the directions of the Government and the Prime Minister, the Ministry of Finance has coordinated with ministries and branches to strengthen inspection and supervision to handle violations in the market to improve the transparency of the market, Carry out propaganda and risk warnings in the market with investors, issuing businesses, and financial intermediaries.

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 their debt.

Regarding the role of the bond market in the future, Mr. Duong said that corporate bonds are a very important medium- and long-term capital mobilization channel for businesses. Second, developing the corporate bond market is also to implement the Party and State's policy to gradually develop a balance between the capital market and the bank credit market.

In the coming time, when businesses need a large amount of capital to expand production and business activities after the economy recovers, the corporate bond channel will become even more important.

"Therefore, this seminar also contributes to management agencies and relevant agencies to recognize and assess the situation to have appropriate solutions in the coming time to develop a sustainable, transparent and effective corporate bond market". Mr. Duong said.

Liquidity increased about 20-30 times compared to the previous period.

Speaking at the seminar, economic expert Can Van Luc said that regarding the corporate bond market, the Government has recently had 4 policy groups decide to restore this market.

Also read: Vietnam's Ministry of Finance: Enterprises must be responsible for bond debt » Vietnam News - Latest Updates and World Insights | Vietreader.com

Firstly, Decree 08 removes existing problems and difficulties, such as: allowing postponement and turnaround... with new, more favorable conditions.

Second, we put into operation the centralized individual corporate bond system. This is an important point to increase liquidity. According to HNX statistics, about 760 corporate bond codes from about 200 issuing organizations have been posted to this system. Thereby increasing market liquidity about 20-30 times compared to the previous period. This is very important, increasing transparency for the market.

Third, we have developed some conditions towards a healthier market. For example, more credit rating agencies have begun operating. In particular, cases of violation of corporate bonds have been handled drastically recently.

Those policies have resulted in the recovery of the corporate bond market. Up to now, about VND 240 trillion has been issued, including VND 220 trillion in private corporate bond issuance and VND 20 trillion in public bond issuance, only down 10% over the same period last year.

Next month is higher than the previous month: October issued 41 trillion VND, September issued 29.5 trillion VND, and August issued 25 trillion VND. Compared to the same period last year, it is also higher. For example, there was about 30 trillion VND in November, 15 times more than in November last year.

"It's clear that the market is recovering. Although there are still barriers, the market is recovering positively, and confidence is recovering... These are signs that help the market develop better." Economic expert Can Van Luc assessed.

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