Corporate bond trading system improves market transparency and liquidity
Corporate bond trading system improves market transparency and liquidity
The operation of a separate corporate bond trading system is necessary to develop a transparent secondary market and increase liquidity for corporate bonds.
Two traders at the trading floor of DSC Securities Co in Hà Nội. In the second quarter of 2023, there were 29 successful domestic corporate bond issuance tranches, with a total issuance value of about VNĐ19.28 trillion, down 34.4 per cent compared to the first quarter of 2023, and down 83.1 per cent over the same period last year. — VNA/VNS Photo |
According to Đinh Trọng Thịnh, Senior Lecturer of the Academy of Finance, the separate bond trading system is necessary and should have been implemented earlier. Privately-placed bonds need a separate trading market, which allows bondholders who do not want to hold bonds for a long time to sell them to others.
This will help the bonds circulate easily and the bonds will be valued more accurately, and at the same time, their safety will be more assured, he said.
According to Nguyễn Bá Khương, an analyst from VNDIRECT Securities Joint Stock Company (VNDIRECT), private placement is still quiet.
According to VNDIRECT, in the second quarter of 2023, there were 29 successful domestic corporate bond issuance tranches, with a total issuance value of about VNĐ19.28 trillion, down 34.4 per cent compared to the first quarter of 2023, and down 83.1 per cent over the same period last year; in which there were 28 tranches of private placement with a total issuance value of VNĐ17.28 trillion, accounting for 89.6 per cent of the total issuance value.
There was only one tranche where bonds were issued to the public with the issuance value of VNĐ2 trillion, accounting for 10.4 per cent of the total issuance value in Q2.
Accumulated in the first six months of 2023, the total issuance value reached about VNĐ48.69 trillion, down 73.3 per cent compared to the same period last year; in which, the total value of private placements reached VNĐ42.78 trillion, down 75.6 per cent over the same period last year, the total value of public issuance reached VNĐ5.9 trillion, down 15.9 per cent year-on-year.
Real estate was the industry group with the largest proportion of corporate bond issuance in the second quarter of 2023 when accounting for more than 34.9 per cent of the total issued value, followed by the banking group, accounting for 29 per cent of the total issued value. The group of multi-industry groups and the logistics group accounted for 10.4 per cent and 8.5 per cent, respectively, and other industries accounted for 17.2 per cent.
Enterprises with the largest private bond issuance value in the second quarter of 2023 include Núi Pháo Mineral Exploitation and Processing Limited Liability Company issuing VNĐ2.6 trillion, with an interest rate of 9 per cent per year and term of 60 months; Construction Business Development Company Limited 3 issuing VNĐ2.25 trillion with the interest rate of 14 per cent per year for a term of 60 months.
TMT Real Estate Development Investment Joint Stock Company issued VNĐ2.01 trillion of bonds with interest rate of 13.75 per cent with a term of 84 months, HCM City Development Commercial Joint Stock Bank issued VNĐ2 trillion of bonds, with an interest rate of 9.1 per cent for an 84-month term.
Private placement in the second quarter of 2023 was quiet, said VNDIRECT Securities Co.
VNDIRECT said that investors' confidence had not improved in the context that many issuers are facing cash flow difficulties, leading to late payment of due bond debts.
According to MB Securities Joint Stock Company (MBS), the poorly-performing real estate and corporate bond markets will create a bottleneck for the capital flow of the economy, causing investment to shrink, slowing down the economic growth.
According to VNDIRECT, as of June 26, about 59 enterprises on the HNX were on the list of late payment of interest and principal debt of corporate bonds, according to the announcement of HNX.
VNDIRECT estimated that the total outstanding debt of these enterprises reached VNĐ159.5 trillion, accounting for about 14.6 per cent of the total outstanding corporate bond debt in the market.
In fact, after the incident at Tân Hoàng Minh, Vạn Thịnh Phát and a series of large enterprises failed to pay bond principal and interest on time, investors have gradually lost confidence in the market.
Therefore, operating a secondary trading floor of corporate bonds would make many bondholders feel secure, said bond investor Nguyễn Văn Hanh.
According to Deputy General Director of Việt Nam Construction Securities Joint Stock Company (CSI), Đỗ Bảo Ngọc, the Vietnamese bond market lacks a centralised secondary trading market and this market should have been in operation a long time ago.
He said that the operation of this bond market would be a factor in the development of the Vietnamese market in the long term, making the liquidity of bond transactions increase.
The floor would be a professional and effective capital mobilisation channel.
“We gradually have a more professional financial system, thereby attracting more foreign capital,” Ngọc said.
The separate bond trading system must operate safely and efficiently, in line with international practices and meet the requirements of future development of the corporate bond market.
According to Director of the Market Development Department, State Securities Commission, Tạ Thanh Bình, when the market is in place, member securities companies will monitor the participation of investors more effectively.
The new secondary bond market increases corporate bond transparency and increases access from issuers to investors, thereby improving payment quality and minimising risks for investors.
