Financial experts are optimistic about the growth of Vietnam’s corporate bond market with forecast that the market would see a boom in the near future.
Truong Hung Long, deputy director of the Finance and Banking Department under the Finance Ministry, said the corporate bond market is meeting full conditions for high growth.
With current favorable condition, not only the large economic groups, but smaller companies, would issue corporate bonds, he said.
The department’s director Pham Phan Dung said earlier this year that Vietnamese businesses have great opportunity to raise capital via issuing bonds inside and outside the country.
The Finance Ministry said it has made a legal framework for businesses to issue bonds to the public. The Law on Business, Law on Securities, and Decree No.52 all create favorable regulations for businesses to issue bonds. The ministry is also compiling a new decree on issuing bonds on the international market.
Vietnam started the operation of corporate bonds in 1994 but till 2006 the government issued the Decree No.52 allowing businesses to issue bonds separately. Under the decree, not only state-owned businesses but also private, joint stock and foreign-invested companies were permitted to issue bonds.
In 2006, local businesses raised more than VND8 trillion through bond issuances. Some corporations issued a big volume of corporate bonds such as Electricity of Vietnam (EVN) with issue of VND5 trillion, Vietnam Shipbuilding Industry Group (Vinashin) with VND800 billion, and Song Da Corporation with VND260 billion.
In the first seven months of this year, local businesses issued VND7 trillion worth of bonds.
At a conference on the developing bond market in August, a representative from Citibank said foreign investors are cautious of bonds issued by Vietnamese businesses due to low confidence in domestic business transparency.
Dung proposed that Vietnamese businesses should improve their business efficiency, competitive edge and make financial reports transparent to earn trust from investors.
Hisatsugu Furukawa, a consultant with the Japanese International Cooperation Agency (JICA), shared the view, saying that transparency on financial issues is the only way to win investors’ trust.
In a bid to support bond issuance by local businesses, the Finance Ministry has hooked up with the Secretariat of the Association of Southeast Asian Nations (ASEAN) and the Japan-ASEAN Financial Technical Assistance Fund to draft business bond handbooks to supply essential information for local businesses to issue bonds abroad. (VNA)
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