According to the Vietnam Bond Market Association, in the first two months of the year, the total corporate bond value issued to the public rose by 31 percent.
According to the Vietnam Bond Market Association, in the first two months of the year, the total corporate bond value issued to the public rose by 31 percent, and the total privately-issued bond value increased by 51 percent over the same period last year.
With her deposit of VND300 million which matures in some days, Nguyen Thu Ha in Ha Dong district has received many calls recently from bank officers who want her to buy corporate bonds.
The offers are attractive. The current bank deposit interest rates are low, while the gold and stock prices are overly high. Investors need to have a lot of money to buy real estate, so buying corporate bonds to enjoy high interest rates of 10.5-13 percent per annum proves to be a wise choice.
If Ha continues to deposit the money (VND300 million) at the bank, with the interest rate of 7 percent per annum, she will get VND321 million in both principal and interest after 12 months. Meanwhile, if she buys corporate bonds, she will have VND331.5 million.
Tran Hoang Dung in Thanh Xuan district said he had received many calls these days inviting him to buy bonds. The callers advised Dung ‘not to put all eggs into the same basket’, but use a part of the money he has to invest in corporate bonds.
Under the 2019 Securities Law, investors, both institutional and individuals, must have financial capability or knowledge about securities trading. Meanwhile, individuals must be ‘professional investors’ with an investment portfolio worth at least VND2 billion.
It’s not difficult to become eligible to trade bonds. When signing contracts on buying bonds, issuers will help people become ‘professional investors’ by remitting VND2 billion into their accounts and then freezing the account. After fulfilling procedures, they can withdraw the VND2 billion from the accounts.
With this method, when having just several hundreds of million dong, one can circumvent the law and buy corporate bonds.
According to the Vietnam Bond Market Association, the total value of corporate bonds issued in the first two months of the year reached VND26 trillion, twice as much as the same period last year.
Analysts said bond issuance would be very busy in 2022. Up to 60 percent of bonds will mature in the next two years. The Covid-19 pandemic has caused many enterprises to fall into difficulties as cash is exhausted.
Therefore, businesses need capital to survive the difficulties and they tend to seek capital from bond issuance. As the economy is recovering in the post-pandemic period, businesses have high demand for mobilizing capital. The bond interest rates are expected to attract more investors.
As the corporate bond market has shown signs of fast growth, this capital mobilisation channel will be closely inspected and controlled this year.
The over-growth of the corporate bond market in the past two years poses threats for the Vietnamese economy in the 2024-2025 period, when these bonds will reach maturity.