MoF to strengthen the capital market
Besides amending and supplementing the decree on offering and trading private placement corporate bonds in the domestic and foreign markets, the ministry will also review the Law on Securities and the Law on Enterprises.
The Ministry of Finance (MoF) is coordinating with ministries and agencies to assess the market situation to consider and submit to the Government amendments and supplements of a number of articles of the decree on offering and trading private placement corporate bonds in the domestic and foreign markets.
Minister of Finance Hồ Đức Phớc said the move was aimed to solve a number of current problems.
The ministry would also review the Law on Securities and the Law on Enterprises to amend the regulations on the conditions for issuing corporate bonds and for professional securities investors.
Regarding the capital market, Minister Phớc said that with the rising capital mobilisation scale, the market had gradually affirmed its role as an effective medium and long-term capital mobilisation channel for enterprises, which is in line with the State's orientation on the balanced development of the capital market and credit market, reducing the pressure on the bank credit channel's capital supply for the economy.
Meanwhile, the country's corporate bond market size is quite modest compared to the region's peers, according to the ministry. The outstanding debt of the corporate bond market is currently over 15 per cent of GDP, while the Financial Strategy sets a target that the corporate bond market size will be 20 per cent of GDP by 2025 and at least 25 per cent of GDP by 2030.
The stock and bond market in 2022 has experienced many ups and down, mainly due to the reduction of investors' confidence and low domestic liquidity, as well as investors' cautious sentiment amid uncertainties and less positive economy and policies in the world.
For the domestic market, higher interest rates tend to shift cash flows to the commercial banking system, resulting in the tightening of the economy's liquidity.
The corporate bond market is even affected by investors' confidence due to the violations of some enterprises that have just been handled and the fact that some media report unorthodox and false information about some bond issuers. On the other hand, both issuers and service providers also worry about the inspection and supervision focused on monitoring the purpose of bond issuances.
To restore confidence and ensure the rights and interests of investors and market participants, the head of MoF said that the agency had implemented many synchronous solutions.
Most recently, the Ministry held a meeting on November 23 with 39 issuers and securities companies to discuss the payment of bond principal and interest, and propose solutions for the market.
MoF requires issuers to use all resources to ensure payment of bond principal and interest as committed to investors. In case of difficulties in balancing sources for payment, the issuer actively negotiates with investors to consider and take harmonised measures to restructure bond debts in line with the actual situation of the economy and in accordance with the law.
The ministry has suggested that enterprises consider using audit, credit rating, and asset valuation services to assess the business and financial situation of enterprises and promptly publish official information for investors to grasp the companies' actual financial situation.
According to the minister, it needs to strengthen communication, stabilise investors' sentiment and confidence, continue to focus on communicating with a clear message about the State's development orientation for the corporate bond market while coordinating with the Ministry of Information and Communications in orienting communication issues, preventing unregulated and unorthodox news reporting; promptly detect and take measures to strictly handle cases of fake news, affecting the market.
In addition, MoF also has to focus on management and supervision, improve the efficiency of law enforcement; review and reform the process of licensing securities offering to the public, creating favourable conditions for eligible enterprises to offer bonds to the public; direct the stock exchanges to prepare individual corporate bond trading platforms in order to develop a transparent secondary market.
The ministry has proposed to the State Bank of Việt Nam (SBV) to focus on implementing measures to ensure liquidity of the commercial banking system and manage credit growth in line with the development of the economy in the context that the corporate bond market is facing difficulties.