Saturday, August 8, 2020 1:21:19 AM - Markets open
VN-INDEX 841.46 +1.42/+0.17%
HNX-INDEX 112.78 -0.57/-0.51%
UPCOM-INDEX 56.22 +0.10/+0.18%
Corporate bond market to boom in second half
Người đồng hành - 7/7/2020 1:27:41 PM
 (0 ratings. You must sign in to rate.)
Companies are looking to raise debts from bond issuance before the amended Law on Securities takes effect next January.
 
The amended securities law, which was approved by National Assembly deputies in November 2019, will take effect on January 1, 2021.
 
The amended law will restrain local companies from selling their bonds to investors, especially individuals, to diminish the risks for the equity market.
 
According to Bao Viet Securities Co (BVSC), corporate bond issuance in June was estimated at 31 trillion VND (1.34 billion USD).
 
In May, the value was 27 trillion VND, which was down slightly from the previous month as the economy suffered from the social distancing and the spread of the coronavirus.
 
Real estate firms and banks were the biggest issuers as they sold 8.5 trillion VND and 11 trillion VND worth of bonds in June, respectively.
 
But banks’ issuance value was down slightly compared to May while real estate firms hiked their issuance to 11 trillion VND in June from 4.75 trillion VND in May.
 
That indicated real estate developers were still hungry for capital as they had difficulties getting access to bank loans, said BVSC analyst Nguyen Duc Hoang.
Recent issuers include residential developer Vinhomes, which outsold 12 trillion VND worth of bonds in private deals.
 
The corporate bond market would be more dynamic in the last six months of the year and both issuance volume and value would jump, Hoang said.
 
“Banks and real estate firms will remain the biggest issuers,” he said. “Banks will need more borrowing to lower their capital expenses and maintain their capital adequacy ratios.”
 
“As property developers will be restricted from loans from banks and financial institutions, their demand for debt will increase, especially when bond issuance will be tightened next year under the amended Law on Securities.”
 
Under the new law, companies will have to meet higher standards of bond issuance while unprofessional (or uncertified) investors are no longer eligible to purchase corporate bonds.
 
According to business insiders, unprofessional investors are often individual ones, who are not qualified for financial investment by any companies and market regulators.
 
Individual investors are lured into the corporate bond market because companies offer annual yield rates (average 10-11 percent) that are higher than banks’ saving rates (average 7-8 percent).
 
In addition, they don’t have to wait until the maturity dates of the bonds to sell the assets like they do when depositing in banks, as they can negotiate with the company that is the distributor of the bonds.
 
Especially, individual investors don’t pay close attention to the financial health and operation of the bond issuer.
 
“Restraining unprofessional investors from buying corporate bonds is common in the international markets,” Vuong Hoang Son, director of bond market at VNDirect Securities Corporation, said.
 
“This type of product is more suitable for institutional investors, who are able to analyse and evaluate the issuers while companies also have to meet strict issuance requirements,” he said.
 
“Companies should be encouraged to sell bonds in public deals and the procedures should be simplified to make it more convenient for them to do so,” Son said.
 
Limiting individual purchases for corporate bonds may not affect the market because major buyers are institutional ones with strong financial capacity and experience, Hoang said.
 
Unprofessional investors must study the bond issuers first regarding their purposes, guarantees and financial capacities when issuing bonds, he suggested.
 
“Investors must be careful with high-interest bond issuers because high risks will come along,” he said. “They should ask for the consultancy of institutional investors before making decisions.”
 
As the corporate bond market is showing signs of significant growth, the Ministry of Finance has asked the issuers to make sure they are financially healthy to pay back the debts. Companies must also be committed to the deals signed with investors, especially individual ones.
 
In addition, the ministry has recommended investors get access to the evaluation reports by financial firms before buying corporate bonds to understand the target and financial status of the bond issuer as well as the chance and risk of the bond deal.
 
Underwriters and distributors are asked not to sell corporate bonds at all costs. They are asked to be responsible for providing accurate, transparent information of the bond issuer and the issuance and make sure the benefits of investors are secure./. 
VNA
 
Read original article here
 
 
Newer News
07/08 Derivatives market sees liquidity rise in July
04/08 VN shares advance on hopes for virus block
04/08 Maximum 130,700 USD fine for listing violations: Draft decree
21/07 Stock market celebrates 20th birthday
18/07 Shares drop further on low liquidity
15/07 New regulations about corporate bond issuance
13/07 Stocks to struggle on mixed Q2 earnings report releases
12/07 Rallies end as profit-taking weighs on large-caps
07/07 VN stocks advance as securities, banking and aviation industries rise
Older News
02/07 VN-Index rebounds, propped up by PMI data and interest cuts
01/07 VN stocks fall for sixth straight day
30/06 Shares plummet on GDP growth record low and surges in COVID-19 fatalities
29/06 July to be a hard month for Vietnamese shares
27/06 VN stocks end week lower on large-cap decline
26/06 VN stocks drop for a third day
18/06 Shares retreat on divergence of large-caps
18/06 Decree drafted to empower SSC to halt market trading
16/06 Shares suffer virus second-wave fears
15/06 Local stocks to struggle with increased caution
 
Newsletter Signup
Top Stories
GDP forecast to grow 3.8 percent this year
New regulations about corporate bond issuance
Reference exchange rate remains unchanged
New traders flock to market
Reforms needed to attract foreign portfolio investment: fund manager
Market Update
Last updated at 3:09:56 PM
VN-INDEX 841.46 +1.42/+0.17%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Portfolio
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.