HANOI: The size of capital mobilization by way of company bonds is forecast to lower sharply, however there shall be a drastic change in high quality, in keeping with a examine on the company bond market by FiinRatings.
Plenty of violations associated to company bonds dealt with not too long ago, together with ongoing coverage modifications, together with the State Financial institution of Vietnam (SBV’s) Round 16 on rules on bond buying and selling by credit score establishments and the modifications and additions anticipated to be included within the draft Decree 153 on non-public placement, are prone to make the company bond market considerably cut back in measurement by 2022, stated FiinRatings.
In 2021 the bond market was a really massive capital mobilization channel, as a result of figures accounted for 54% of the annual change within the credit score development stability of the entire system in 2021.
The company bond market has confirmed to play an essential function as a medium and long-term capital channel for the event of companies in many alternative industries within the context of Covid-19.
Assessing the developments and prospects of the company bond market within the second half of 2022 and 2023, FiinRatings specialists stated that companies with basis and higher transparency, particularly listed corporations, would nonetheless promote bond issuance actions.
The bond channel continues to be an efficient capital mobilization channel within the context of very low rates of interest for banking deposits.
Elevating capital by way of the inventory market additionally attracts traders, however the inventory market continues to be in a section of uncertainty. Moreover, this exercise is extra appropriate for issuers which are public corporations with transparency in data in keeping with present rules.
Analysts of FiinRatings count on a change within the high quality of the company bond market and this can be mirrored within the large development of the general public providing, particularly from companies with clear credit score information available in the market.
Non-public placement will nonetheless be carried out, though it could be much less lively than prior to now years and geared toward a broader investor base, together with skilled particular person traders, monetary establishments comparable to insurance coverage, bond funds, pension funds, as an alternative of focusing totally on industrial banks and securities corporations.
Commenting on the affect of company bond high quality on the credit score high quality of the banking trade, in keeping with FiinRatings, along with securities corporations, industrial banks have participated in shopping for company bonds by way of the first issuance channel to a comparatively massive extent, accounting for 36% in 2021 of the entire issuance worth from actual property companies.
The appliance of SBV’s Round 16 on rules on bond buying and selling, in keeping with FiinRatings, is important to manage the standard of dangerous money owed, particularly banks with weak asset high quality, management the scale of actual property credit score, and management credit score switch actions between the 2 channels of bonds and financial institution loans.
FiinRatings knowledge exhibits that the scale of bond credit score is presently 273.9 trillion dong (US$12bil or RM50.6bil) on the finish of 2021, accounting for less than 2.16% of complete incomes belongings and a couple of.63% of complete credit score excellent of the industrial banks in Vietnam.
The recognition of the company bond funding channel will not be solely massive in scale, but in addition has the robust participation of particular person {and professional} traders by way of redistribution of bonds issued within the type of non-public placement from associated organizations comparable to consultants and distributors available in the market. — Vietnam Information/ANN