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Vietnam to debut private placement bond exchange next week

Vietnam to debut private placement bond exchange next week

Friday, July 14, 2023, 22:33 GMT+7
Vietnam to debut private placement bond exchange next week
A photo shows a woman holding corporate bonds in Vietnam. Photo: Ngoc Phuong / Tuoi Tre

The State Securities Commission of Vietnam will launch an exchange enabling corporate bonds to be traded via private placement next Wednesday.

More than 1,600 bonds will be listed on the exchange, a representative of the commission told Tuoi Tre (Youth) newspaper.

“All preparations for the launch of the exchange are finalized,” said the representative.

The bond trading system had its trial operation completed, according to the leader of the Hanoi Stock Exchange (HNX).

Results of several tests showed the exchange worked well, the HNX leader added.

The HNX representative affirmed that HNX already finished preparing documents for the exchange and offered two training courses to the users of the exchange.

Speaking at a conference held by the Ministry of Finance on Thursday, Deputy Prime Minister Le Minh Khai urged relevant units to put the corporate bond exchange into use in July.

The Hanoi Stock Exchange was assigned to develop the bond trading system.

The corporate bond market was in turmoil in 2022, seeing the number of bond issues plunge, while the volume of redeemed bonds soared, according to the State Securities Commission of Vietnam.

As of the first quarter of 2023, outstanding corporate bonds had totaled VND1,150 trillion (US$48.6 billion), equivalent to 12.1 percent of Vietnam’s 2022 gross domestic product.

Of the total, real estate bonds accounted for 35.1 percent, while bonds issued by credit institutions made up 32.1 percent, and those by producers and other service providers represented 32.8 percent.

Organizations held 74.2 percent of total corporate bonds, while individual investors owned 25.8 percent.

The corporate bond exchange will enhance transparency in the sale of corporate bonds, create a secure trading environment, and beef up the management of the local bond market, said the representative of the commission.

Nguyen Quang Thuan, chairman of FiinGroup, an integrated service provider of financial data, business information, industry research, and credit rating reports, told Tuoi Tre that trading corporate bonds on an exchange is a big step for the bond market, contributing to regaining trust in the market.

Thuan emphasized that transparency in trading corporate bonds is a need.

Though corporate bonds are issued, information about bond issuers and their financial health is now outdated, discouraging investors from buying the bonds, he said.

The launch of the exchange is expected to provide investors with detailed information on corporate bonds and bond risks, boost bond purchase, and foster trust in issuers and the bond market.

As per the prevailing regulations, investment funds are just allowed to buy listed bonds to minimize risks.

The opening of the exchange will also contribute to bond pricing and increase liquidity for corporate bonds, Thuan said.

The FiinGroup leader, however, noted that the volume of bonds traded on the exchange will not be as big as that of stock trading.

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Tieu Bac – Binh Khanh / Tuoi Tre News


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