The Hanoitimes - Strong growth of the corporate bond market in the January – June period has laid solid foundation to gradually form a capital channel in mid- and long-terms for enterprises.
Total corporate bond issuances in the first six months of 2019 reached VND116.08 trillion (US$5 billion), up 7.4% year-on-year, according to the Ministry of Finance (MoF).
Upon breaking down, commercial banks issued bonds worth VND36.7 trillion (US$1.58 billion), accounting for 36% of the total, property developers VND22.12 trillion (US$952.94 million), or 19%, and securities companies 3.5%, among others.
Coupon rates of corporate bonds averaged 9.5% - 11% per annum, 0.5 percentage points higher than the lending rates of commercial banks.
As of the end of June, the capitalization of Vietnam’s corporate bond market was equal to 10.22% of the country's GDP, up 21% year-on-year and exceeding the target of 7% of GDP set for 2020.
Deputy Minister Vuong Dinh Hue said the local corporate bond market has been growing at a rapid rate due to huge capital needs of the businesses.
Meanwhile, the government has tightened credit growth limit, especially in risky sectors such as real estate.
Hue said the strong growth of the corporate bond market in the January – June period has laid solid foundation to gradually form a capital channel in mid- and long-terms for enterprises, relieving pressures for banks.
Moreover, the maturity period of corporate bonds is lengthy, of which the 5-year maturity period accounted for 66% of total bonds issued, with the majority of investors being organizations, while individuals made up 6.1% of the total.
Hue, nevertheless, noted that without appropriate supervision of the corporate bond issuance could lead to risks to the credit market and the macro economy.
Coupon rates of bonds issued by certain companies ranged from 13 – 14%, even 14 – 15% per annum in case of some property companies, Hue stated, adding corporate bond issuers have not been rated, posing potential risks to investors, especially individual ones without sufficient knowledge of the market.
Hue also warned 70% of enterprises issuing bonds using assets which have not been assessed by an independent audit firm or certified of not involving in legal issues.