Restoring Investor Confidence Is Key to Developing Vietnam’s Corporate Bond Market
Vietnamese finance experts say corporate bonds can meet more medium and long term funding needs if issuers disclose clearer financial and debt repayment information and bond liquidity improves. Many issuers still rely on bank support, while banks face substantial funding pressure.
Restoring investors’ trust in issuers is key to making Vietnam’s corporate bond market a more effective financing channel. Đào Minh Tú, Vice Chairman and Secretary General of the Vietnam Banks Association, said many companies still rely on banks to help distribute their bonds, provide guarantees or commit to repurchasing them. This reflects investors’ limited confidence in issuers’ financial strength and ability to meet their obligations. He said companies should clearly disclose their profitability and cash flows for debt repayment so investors can assess the risks.
Nguyễn Tú Anh, Director of Macroeconomic Policy Research at VinUni University, said the banking system currently meets about 80% of Vietnam’s funding needs, while investment demand is mainly for medium and long term capital. If banks continue to finance most projects, the mismatch between deposit and loan maturities will increase systemic risk and make it difficult to lower the cost of capital. He recommended accelerating the disbursement of public investment funds to bring money held by the State Treasury into circulation and ease the pressure on banks to attract deposits.
Đào Minh Tú said that, alongside improving issuers’ disclosure, Vietnam needs to develop a secondary bond market so investors can sell bonds when needed. Greater liquidity would help attract investors to new bond issues. He also said the stock market should place more emphasis on initial offerings, additional share issues and other activities that raise funds directly for companies.
Phạm Phú Khôi, Secretary General of the Vietnam Bond Market Association, suggested reviewing whether banks’ bond underwriting and guarantee activities should count toward credit growth limits. He said banks have experience assessing companies’ finances, managing collateral and monitoring cash flows. Greater bank participation in the bond market could help investors assess bond risks and allow capital markets to meet more medium and long term financing needs.
Source: VietVance
