Tiếng Việt
中文 (中国)
Credit institutions and real estate enterprises are the largest issuers in the market, accounting for 34% and 27.7% of the total issuance volume, respectively, while the rest are commercial, service, manufacturing and Securities Company. However, the corporate bond market still has some potential risks, which need to be closely monitored for the market to develop healthy.
According to the Ministry of Finance, from January 1, 2021, the issuance of corporate bonds is regulated synchronously in the Law on Securities in 2019, the Law on Enterprises in 2020, and guiding decrees and circulars.
After 11 months of implementing new regulations on corporate bond issuance, the corporate bond market continues to be an important capital mobilization channel for enterprises with the issuance volume reaching over VND 495,000 billion, of which the volume of corporate bonds issued by private individuals accounts for over VND 495,000 billion. 94.5%, the rest are corporate bonds issued to the public, accounting for 5.5% of the total issuance volume.
In which, credit institutions and real estate enterprises are the largest issuers in the market. Regarding investor structure, securities companies and commercial banks are the main investors in the primary market, the proportion of individual investors buying corporate bonds decreased compared to 2020.
In order to enhance management efficiency, the Ministry of Finance has directed the State Securities Commission (SSC) to deploy inspection teams on the issue of corporate bonds and provide services related to corporate bonds at a number of issuers and securities companies.
On the basis of inspection results at 9 securities companies and 2 issuers, initially recorded and implemented procedures for sanctioning administrative violations for 2 issuers and 1 securities company.
Specifically, the State Securities Commission has issued a decision to sanction an administrative violation against VsetGroup Corporation for its act of offering corporate bonds through the mass media to unspecified investors without registering with the SSC in accordance with the securities law; the administrative fine is 600 million dong and has requested the enterprise to recover all issued bonds.
Currently, the State Securities Commission is continuing to carry out procedures to sanction Apec Group Corporation for similar behavior. In the coming time, the State Securities Commission will continue to closely inspect and control the issuance of bonds by enterprises that issue large-scale compared to their own capital, issue without collateral and issue corporate bonds.
On the side of the State Bank, on November 10, 2021, this agency also issued Circular No. 16/2021/TT-NHNN stipulating the purchase and sale of corporate bonds by credit institutions and foreign bank branches (effective from January 15, 2022) includes regulations to minimize the risk of corporate bond investment by credit institutions.
Businesses identifying and strengthening risk management
Through management and supervision, the Ministry of Finance assessed that the corporate bond market still has some potential risks and needs to be closely monitored for the market to develop healthily. Specifically, the bond’s fixed assets are still risky.
Among corporate bonds issued privately in the first months of 2021, corporate bonds have special assets accounting for 50.9%; bonds without special assets accounted for 49.1% (of which bonds issued by credit institutions and securities companies accounted for 76%). Among 300 enterprises that issued bonds individually in the first months of 2021, 207 enterprises issued bonds with special assets. Special assets of bonds are mainly real estate, securities, programs and projects.
Although the percentage of bonds with special assets is high, in fact the quality of special assets is mainly projects, assets formed in the future or shares of enterprises. The value of these assets is often inaccurate or volatile according to market movements.
Accordingly, in case the real estate market or the stock market fluctuates, the value of the fixed assets may not be enough to pay the bond principal and interest. In addition, the special assets of bonds can be used to secure loans and other bond issuances of enterprises, so investors need to carefully evaluate these risks.
For issuers, in the market, there are still cases where enterprises issue corporate bonds with a large volume while their equity is small, resulting in loss of business results over the years. Especially for the real estate group, among more than 100 real estate enterprises that issue corporate bonds individually in 2021, 26 enterprises recorded losses in the first 6 months of 2021; As of June 30, 2021, the average debt-to-equity ratio of listed real estate companies is 2.5 times, while this ratio of unlisted real estate companies is 8.1 times.
For investors, statistics show that professional individual investors tend to reduce their purchases in the primary market of individual corporate bonds, however, in the secondary market, the percentage of investors holding Private investment is still very high.
The Ministry of Finance recommends that before considering buying individual corporate bonds, investors should study the regulations on conditions, supporting documents and regulations on penalties for violations for professional securities investors.
When being introduced to buy corporate bonds individually, investors need to ask the issuing company or the distributing organization to provide complete and accurate information about: The financial situation of the issuing company, including the situation of capital mobilization bonds, criteria for assessing the debt repayment capacity of enterprises (the ratio of liabilities to equity, the ratio of solvency of short/long-term debts, the inventory turnover ratio, etc.); the purpose of issuing bonds; Fixed assets of bond, etc.
In addition, after buying bonds, investors need to regularly update on the financial situation, debt repayment capacity of the issuer and whether the use of capital raised from bonds is suitable for the purpose of issuing bonds.
The Ministry of Finance recommends that individual investors should not buy corporate bonds individually if they do not have the ability and resources to fully assess the risks of the bond etc. Investors should pay close attention to the basic investment principles that are High interest rates will come with high risks, so it is necessary to carefully evaluate the risks etc.
Investors should also note that the fact that credit institutions and securities companies distribute corporate bonds does not mean that these organizations guarantee the safety of buying bonds. These organizations are only service providers, enjoying service fees from the issuer but are not responsible for the appraisal/evaluation of the issuer’s financial position and debt repayment ability, therefore not is responsible for whether the enterprise will repay the bond principal and interest upon maturity or not. The risk of bonds is still the risk of the issuer.
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